Is Bigger Better?: Weighing the Pros and Cons of Super Bulk Distribution Facilities
“Super bulk” distribution facilities — those covering 500,000 or more square feet — have been hot commodities for the past several years. But are they wise investments? As with any investment, there are plenty of pros and cons that should be weighed, especially because these buildings may represent a large concentration of risk. Investors should consider a number of factors before deciding whether increasingly popular super bulk buildings are right for their portfolios.
THE GROWTH OF SUPER BULK
Since 2000, the number of U.S. warehouses greater than 500,000 square feet has almost doubled, outpacing the growth rate of smaller counterparts by a factor of five to one. This growth has been driven in large part by the evolution of the global supply chain. Many major retail, food and consumer products companies with national footprints and offshore manufacturing have shifted from smaller warehouses in the individual markets they serve to regional distribution faciliti