Industrial land prices have risen by double-digits as developers scramble to build new warehouses and distribution centers in the e-commerce era, according to CBRE.
The average price for an industrial parcel climbed to $196,000 per acre, a 14 percent increase from a year ago.
“As a result of the shift in consumer purchasing, there’s been a change in the tenant requirements of industrial occupiers who service those consumers,” said Thomas Monahan, an executive vice president with CBRE. “Scarcity of both existing inventory and larger sites to accommodate these buildings has placed upward pressure on pricing, pushing land prices and rents to unprecedented levels.”
On a percentage basis, California’s Inland Empire saw the largest increase, of 35 percent, which resulted in an average per-acre cost of about $980,000 for prime warehouse development land. Northern New Jersey topped the chart for average price, at $1.8 million per acre, a 17 percent increase from 2016.
Numerous other major markets saw double-digit increases in industrial land prices, including Las Vegas (up 17 percent to $220,000), Chicago (up 16 percent to $250,000), Atlanta (up 14 percent to $100,000), Houston (up 14 percent to $196,000) and Central New Jersey (up 10 percent to $650,000). In many cases, the markets that registered substantial gains in land prices also saw increases in average asking rents.