General retailers and wholesalers leased the most big-box warehouse space in North America in 2023, accounting for 36% of all transactions, according to a new report from CBRE. Retailers and wholesalers dethroned last year’s top occupier category, third-party logistics (3PL) providers.

In addition to retailers & wholesalers, automobiles, tires & parts and building materials & construction also saw an increase in share of leasing activity, which overall fell 15.8% in 2023.

Industrial construction activity peaked in 2023, with a record 413 million sq. ft. delivered to the market, causing a doubling of the vacancy rate to 6.6%. However, construction in progress dropped to 208.4 million sq. ft. by year end, half of the previous year's total.

CBRE forecasts a 5% increase in big-box leasing volume in 2024 as current market conditions are favorable to tenants. This indicates a potential rebound in demand, as the market strives to catch up with the robust deliveries of newly constructed industrial spaces.

“There was naturally going to be a period of cooling in big-box leasing, which had reached unsustainable levels in recent years, due to e-commerce demand and companies electing to warehouse to more inventory,” said John Morris, CBRE’s President of Americas Industrial & Logistics. “This cooling represents a move toward stabilization, and we expect a modest increase in lease transaction volume this year as the market settles.”

CBRE analyzed “big-box” warehouses of 200,000 sq. ft. and larger because warehouses of that size are crucial for extensive national and international product distribution. Encompassing the United States, Mexico and Canada, the big-box report found that industrial facilities had higher taking rents than in years past. Rent growth remained robust at 15.9%, but down from 25.1% in 2022.

Of the leasing activity that took place, demand was driven primarily by a desire to boost supply chain resilience, increase access to growing population centers, modernize space to accommodate increased automation and support continued e-commerce growth.

“There were signs of increased demand for big-box space by year-end, and that trend has continued into Q1 2024,” explained Mr. Morris. “We’ve seen a move from occupiers to keep inventory closer to their point of sale as they prioritize supply chain resiliency, which should benefit mid-size and big-box facilities alike. We also anticipate the slowdown in construction to support higher rents as the new inventory is gradually absorbed.”

North America’s Top 25 Core Markets

CBRE’s report examined 25 big-box markets in North America. The top 10 markets in North America, ranked by square feet leased, were: