The e-commerce-fueled surge in development of warehouses and distribution centers has generated double-digit, year-over-year percentage increases in prices for industrial land in major markets, with Chicago recording a 16 percent price increase, according to a new report from CBRE.
CBRE found that the average price for large industrial parcels of 50 to 100 acres – usually earmarked for construction of large, regional warehouses – increased to more than $100,000 per acre from roughly $50,000 a year ago.
Similarly, industrial plots of five to 10 acres – often suited for construction of smaller, infill distribution centers in urban or suburban settings – increased to more than $250,000 per acre this year from roughly $200,000 a year ago.
In Chicago, the average price per acre of land for prime warehouse development is now up to $250,000, a 16 percent increase year-over-year.
“Overall demand for industrial land remains strong and it is especially high in infill markets,” said Matt Ishikawa, senior vice president in CBRE’s Land Services Group. “Developers have been very active in the Chicago area with both built-to-suit and speculative industrial projects and this activity is not slowing down heading into 2018. Demand is so strong for industrial sites that buyers are looking beyond just green fields and are also seeking tear-down and redevelopment opportunities.”