Ecommerce growth and innovations to supply chain management drive warehousing boom

Driven by the magnitude of fulfillment and ecommerce centers, Atlanta’s industrial real estate sector has finished the last two years stronger than ever.

In 2018, 18.9 million square feet of warehousing and distribution space were delivered in metro Atlanta, with another 19.2 million square feet under construction. In 2017, the Atlanta region had the highest amount of net absorption of any U.S. market, ending the year with 22.3 million square feet.

Why Atlanta stands out against other markets nationally

What’s driving such high industrial demand here? Some market features are standard for any area that expects to draw big warehousing tenants — access to several interstates, intermodal rail yards, an international airport and proximity to a port (Port of Savannah).

Atlanta simply has more of these spaces available than other cities do. There have been companies looking at other markets, but because those markets had a lack of large space inventory, Atlanta continues to attract premier companies.

Changing workforce needs and advanced supply chain technology

Warehouse site seekers also are drawn to Atlanta’s considerable inventory of specialized space that is conducive to cutting-edge supply chain management (shipping, packaging, receiving) methods.

Advanced supply chain processes often require 40-foot warehouse ceilings as well as abundant trailer and automobile parking. Some mega industrial space users, like Amazon and Home Depot, want warehouse and distribution centers designed to accommodate high-tech systems, such as drones to track inventory and robots to pick-up and carry products from shelves to human packers.

To attract the best labor, some industrial space users are now looking for employee amenities like lounges and fitness facilities to be a part of their new warehouses.

Focus on environmental concerns and turnaround times

Environmental concerns are another major issue shaping the development of today’s industrial spaces. Users are now focusing on sustainable and energy efficient materials for new spaces, and sometimes they will reconstruct existing warehouses.

For existing warehouses built in the early to mid-1900s, not all of them are suitable for the turnaround times today’s online shoppers expect and the volume of product that many companies ship. But certain spaces, depending on their flexibility and location, may be more viable than ground-up facilities.

For example, the vacant department store end of a suburban shopping mall can be the perfect location for a fulfillment center that wants to be within that “last mile” of a certain population, like millennials or married couples with children. And if an older space can be retrofitted with more dock doors and deeper truck courts, users may begin to give them greater consideration.

Strong demand for warehouse space in Atlanta will continue to grow 

Overall, Atlanta’s industrial space sector stacks up well nationally. While the magnitude of fulfillment and ecommerce centers have driven the industrial space needs over the last two years, the larger retail chains who have closed their distribution centers within metro Atlanta have also provided another alternative to warehouse spaces at a lower price than new construction. Strong demand for warehouse space in this segment is expected to continue for the next several years because of the impact of these factors and the continued economic growth of the Atlanta region.

Download JLL’s Atlanta Industrial Insight Report 2019 to learn more about other trends in the industrial supply chain industry.