The booming business of retailers that sell household essentials has proved a boon for owners of distribution and warehouse space.
While overall industrial leasing volume has been moderating for nine months, leasing to retailers that sell daily necessities like budget food and sundries remains healthy, according to CoStar Group’s monthly CRE update for June.
Sam’s Club has been one of the most active lessees, renting more overall square feet of distribution space so far in 2023 than it did during the whole of 2021 or 2022.
Walgreens has also been busy. In April, the company signed a 15-year lease for 460,000 SF in Dayville, CT, following a 10-year lease for 683,000 SF in Jupiter, FL, signed in November. These deals helped bring Walgreens’ industrial leasing for the year to a peak not seen for 15 years.
Another internal corporate record was set when Dollar General signed a five-year lease for one million SF in Justin, TX – the company’s largest new distribution lease recorded by CoStar.
However, at least one company is pulling back. Big Lots is closing more than 1.3 million SF of space in four forward distribution centers in Georgia, Pennsylvania, Indiana and Washington.
Elevated levels of port traffic at the Port of Virginia in Norfolk and new industrial development have transformed Virginia into one of the nation’s tightest industrial markets, according to CoStar. The effect has spilled over into nearby Richmond, which has seen a surge in large industrial leases over the past year. Among the signatories are Sanmar, Dominion Packaging, Sapporo Group, Lowe’s, UPS and Sam’s Club.