Newmark report details Amazon-fueled industrial real estate boom

0
Reading Time: 3 minutes

Delaware, the nation’s second-smallest state by land area has an outsized industrial property pipeline, with demand to match. That’s according to a recent report from Newmark, a commercial estate firm with an office in Wilmington.

In New Castle County, 5.9 million square feet are under construction as of February, and 90 percent of the space is pre-leased. The development pipeline represents nearly a quarter of Delaware’s existing competitive industrial-logistics inventory and exceeds the combined volume of space delivered in the past 20 years, Newmark noted.

Land, labor, location, state incentives, and Amazon have triggered the boom, according to the report. Delaware lost thousands of blue collar jobs with the phaseout and closing of the GM and Chrysler assembly plants prior to 2010.

blankIn Delaware, institutional-grade industrial development (or any industrial development, for that matter) has been limited.

Distribution center activity had focused on the western edge of Cecil County, MD, the home of distribution sites for grocer Lidl, Amazon, Restoration Hardware, and others.More recently, the availability of large parcels with access to interstate highways and a strong warehousing labor pool finally caught the attention of developers, especially as land availability dwindled in the Lehigh Valley of Pennsylvania and parts of New Jersey.

Three major land purchases in the past few years have set the stage for current construction levels in Delaware: Harvey Hanna acquired a 142-acre former GM plant in 2017; Northpoint Development purchased a 190-acre parcel in Delaware City in 2019 from a chemical company, and Stoltz Real Estate Partners acquired a 125-acre parcel off DuPont Highway near Delaware City in late 2020, Newmark reported.

Industrial development is now underway at each site, with large parcels still available for sale.

The driver for new industrial-logistics development in Delaware is Amazon. The e-commerce giant pre-leased 5.2 of the 5.9 million square feet under construction and is rumored to be taking a 577,829-square-foot warehouse underway at Delaware City Logistics Park – the last available, spec space on the market.

Earlier, Dart, the maker of Solo red cups and other products opened a distribution center at the logistics site near Delaware City.

On the sidelines is the redevelopment of the former Claymont Steel site on the state’s northeast edge. The Midwest-based developer of the Claymont site is sticking to a non-logistics strategy.

However, to the north of the newest Amazon sites in the Delaware City area, plans call for distribution-warehouse space off Route 896, just south of Newark. The development has drawn scrutiny, since the site is believed to be part of a wide area where Cooch’s Bridge, the state’s only Revolutionary War battle, was fought.

It’s hard to overstate what Newmark describes as the “Amazon Effect” in the First State, the report noted.

Amazon is set to occupy seven million square feet, essentially rivaling the square footage of the entire Wilmington Central Business District office market at 7.3 million square feet.

With the exception of San Antonio, Amazon is the anchor for more industrial space under construction than in any other market in the nation.

Boosting the volume in Delaware, and other top Amazon development markets are new distribution sites – multi-story, high-tech facilities that incorporate the usage of robotics to connect goods with consumers. The Boxwood Amazon site has the above-listed features.

With e-commerce demand reaching new heights, it’s clear that Amazon’s expansion is not slowing anytime soon, Newmark stated.

Delaware’s historically high level of new, institutional-grade construction will continue to grow to meet demand from not just Amazon, but from other tenants that are now considering Delaware for the same reasons – land, labor, and location, the report concluded.

Facebook Comments