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How large is the US warehouse industry and is it growing in terms of M&A activities?
Hello! Thanks for your question about the size of the US warehouse industry and its growth in terms of M&A activities. The short version is that the warehousing industry in the US is valued at $20 billion, comprises of an estimated 70.1 million square feet of industrial property. The warehouse industry grew 6% in the last year and is poised to continue growing. However, 2016 was a slow year for M&A, potentially due to heavy activity in 2015. Below you will find a deep dive of my findings.
METHODOLOGY
In order to answer your query, I compiled data from market reports, industry updates, supply chain news reports, and other relevant media sources. I sourced data on current market trends as well as sourcing statistics and predictions about past and future growth, and researched relevant trends in warehouse M&A.
MARKET SIZE
The overall market size for the warehousing industry in the US is currently $20 billion, representing 70.1 million square feet of industrial space. The warehouse market is tied to several related markets; manufacturing, wholesale, and retail. As these industries grow, demand for warehousing services grows proportionately. Additionally, over 198,000 individuals are employed by the warehousing industry. An increase in demand also has drove up warehouse rents over 4% in nearly all major US markets.
Specific areas that dominated the industrial/warehouse industry in 2016 (measured in terms of millions of square feet) were:
It was also noted that the highest proportions of warehouse establishments were in the Southeast, West, Great Lakes, and Mid-Atlantic regions.
CURRENT & PROJECTED GROWTH
The warehouse industry grew 6% in 2016 from the previous year. It is anticipated that the industry will continue to grow as related to increased productivity, rise of e-commerce, and higher demands for inventory storage and tracking. It is also noted that in many markets, warehouse/industrial rents have hit historic highs, and rent is expected to continue to grow.
Warehouse rent growth has also been seen in specific regions and focused in smaller markets including Kansas City, Missouri (3.2 percent rent in 2015), Nashville, Tennessee (2.8 percent rent growth in 2015), Oakland, California (2.7 percent rent growth in 2015) and Columbus, Ohio (2.6 percent rent growth in 2015).
M&A
It was noted that as a whole, 2016 was not a large year for M&A in the warehouse industry compared to the prior year. In 2016, just $29.2 billion in industrial property changed hands, compared to $78 billion in 2015. Its noted that the slow down may be related to how many acquisitions there were in 2015. It was however noted that M&A in all sectors rose to high level domestically towards the end of 2016 compared to earlier in the year.
There were indeed several recent large warehouse acquisitions that gained media coverage in 2016. Global Logistics Properties acquired 15 million square feet of warehouse property from Hillwood Development in 2016. Hillwood Development is known for housing Amazon, Williams Sonoma, and Starbucks. Blackstone Group LP also bought 46 industrial properties at the end of 2016 from LBA Realty LLC for $1.5 billion.
So in summary, the $20 billion US warehouse industry is anticipated to grow steadily and rate rents continue to rise, due to increased manufacturing productivity, rise of e-commerce, and higher demands for inventory storage. Thanks for using Wonder! Please let us know if we can help with anything else!