Industry Insights
The global warehouse leasing market revenue was reported at USD 71.26 billion in 2017 and is expected to be valued at 106.22 billion by the end of 2025. The market is primarily driven by the increasing demand for leasing derived from third party logistics, manufacturing & engineering companies, FMCG and e-commerce companies in developed economies such as the U.S. and UK.
Global warehouse leasing market size by region, 2015 - 2025 (USD Billion)
Increasing modernization of the warehouse operations by significant adoption of technology will ensure economic operations of the warehouses. The use of automated guided vehicles, conveyor belts, warehouse management systems and radio-frequency enabled tags will optimize the movement of the goods.
Hence, warehouses with automated management systems utilize lesser space to store the same volume of goods as compared to the conventional formats. Besides, the rising number of businesses in the U.S. is anticipated to drive the demand for the warehouse leasing market. In 2018, a number of firms in the U.S. had grown by about 2.5% in comparison with 2017.
The growth of business sector renders an increase in employment in the industry. This, in turn, favors the growth of leasing warehouses during the forecast period. The U.S. witnessed a rise of about 2.0% in the number of employees in the business sector in 2018.
The political situation of a country or a region impacts the growth of the commercial leasing market. The political scenario poses a significant influence on trade investment and this, in turn, affects the businesses. For instance, the Trump administration in the U.S. has provided new security criteria for the foreign companies directly investing in the real estate market.
Climatic conditions of a nation also impact the market growth. Changing climatic conditions can directly affect the product and work quality in the warehousing sector of the market. Hence, this factor directly influences the domestic and foreign companies to invest in the real estate market.
Additionally, the rise in disposable income increases the chances of consumers to purchase more possessions in materials. This increases the chances of acquisition of storage facilities due to the lack of space. The per capita disposable income drives the market demand over the forecast period. In 2017, U.S. accounted for the largest per capita disposable income with 41.5% above than the OECD average.
Segmentation by region
• North America
• Europe
• Asia Pacific
• Central & South America
• Middle East and Africa
North America dominated the global market accounting for 39.22% share in 2017 and is expected to grow at a CAGR of around 3.8% by the end of 2025. The warehouse industry in the US is on a robust demand due to a rise in the number of working capital and modernization of the building construction. This, in turn, has increased the growth of warehouse leasing market in the region. In 2017, almost half of the U.S. warehouse space under construction, around 72 million square feet was already financed for tenants. Third-party logistics, e-commerce, and retail sectors form the primary members.
Asia Pacific is the fastest growing region in the global market growing at a CAGR of around 7.3% by the end of 2025. The market holds a significant share of around 23.88% in 2017. The advancements in the construction and retail industry of countries such as Japan, China and Hong Kong has led the growth of the storage industry in the region, thereby growing the market demand. According to the Global Construction report in 2018, China is forecasted to be the largest market in the construction sector in the next 10 years representing about 19.2% of the global market.
Competitive Landscape
The key players in the market such as CBRE Group, Inc., Cushman & Wakefield, Jones Lang LaSalle Incorporated, Colliers International Group Inc., NAI Global and Newmark Grubb Knight Frank (NGKF) invest on the commercial leasing sectors such as e-commerce, manufacturers, retailer, food and beverage sectors. In 2017, the warehouse leases in the US were found majorly from the e-commerce sector accounting for about 22 million square feet.
Substantial investments from the leading players towards the development of their companies to attract more domestic and foreign investments have been a factor towards the growth of the real estate market. For instance, in 2015, Jones Lang LaSalle Incorporated invested around USD 20 billion in the industrial real estate which resulted in a 37.5% share of foreign trade from the U.S. Canada and China.
The market players are continuously striving to introduce new improvements to the existing market focused on the acquisition and proptech services. These services provide technological advancements to the real estate industry, thereby improving the development state of the market.
Collaboration and service innovations are the principal focus of the leading market players to influence their present and future investment decisions. For instance, in 2018, Leverton has announced to collaborate with JLL (Jones Lang LaSalle Incorporated) and automate their lease abstraction systems for the clients in major countries of North America, Europe, Latin America, and the Asia Pacific.
