3PLs lead the pack for bulk industrial leasing, reports CBRE

A new research report recently issued by Dallas-based industrial real estate firm CBRE continued to highlight how third-party logistics (3PL) services providers are upping their share of bulk industrial leasing.

In its report, entitled “Three Trends Driving Resurgent 3PL Industrial Demand This Year,” CBRE stated that 3PLs share of bulk industrial leasing—or leases of 100,000 square-feet or more—increased to 34.1% through the third quarter, ahead of 30.6% a year ago at the same time.

What’s more, CBRE said that 3PL leases, at 498 year-to-date, are up 9% compared to 457 a year ago at that time, with 3PL’s bulk leasing activity in 2024 has seen steady gains, while “reversing the steadily decreasing trend of 2023.”

The 34.1% increase in bulk industrial leasing by 3PLs accounts for 134,567,409 SF leased. Rounding out the top three were General Retail & Wholesale, at 104,864,751 SF, for a 26.6% market share, and Food & Beverage, at 104,864,751, at 9.0%. Notably, Manufacturing, at 245,571,518 SF and 6.2% of market share, and E-Commerce Only, at 21,974,705 SF and 5.6% of market share, came in at fifth and seventh, respectively.

CBRE cited various factors as key drivers for the ongoing uptick in 3PL’s bulk industrial leasing efforts, including

• Import flexibility: Companies are diversifying their supply chains to mitigate risks, with seaport markets leading at a 40.6% 3PL share. Despite not being port markets, the Inland Empire and PA I-78/81 Corridor also see significant 3PL shares of 45.2% and 50.1%, respectively, due to their proximity to major population centers;
• Cost management: By outsourcing logistics, businesses can convert large upfront costs into regular monthly expenses. This makes it easier for them to manage their budgets and invest in other areas of their operations;
• Companies can focus on what matters: Businesses can now spend more time and resources on their main products and services while letting 3PLs handle storage and distribution; and
• Supply Chain Resiliency: The growth of 3PLs enhances supply chain resilience by enabling businesses to quickly adapt to disruptions, such as labor shortages or geopolitical issues. With flexible logistics solutions, companies can ensure continuity and responsiveness, ultimately improving their ability to meet customer demands.

James Breeze, CBRE’s Vice President of Global Industrial Research, explained in an interview that labor disruptions, weather disruptions and international geo-political uncertainties have made supply chain resiliency the top demand driver for industrial real estate.

“Companies are diversifying their source of imports and looking more at the onshoring of manufacturing of goods into the Americas,” he said. “This strategy requires having warehouse locations in multiple locations. Given the uncertainty of product sourcing, retailers and wholesalers are outsourcing the storage and distribution of goods to third party logistics providers rather than entering into multiple leases themselves. This allows for easier shifts of inventory production and storage levels without taking on the real estate risk. We expect this trend to accelerate in 2025, and 3PLs to remain the top occupier of industrial space and their activity will help industrial real estate demand remain on par with 2024 levels which looks to be the 3^rd best year on record for leasing.”

When asked how increased usage of 3PLs are enhancing supply chain resilience efforts on behalf of retailers, Breeze that both retailers and wholesalers have the ability to store higher or lower quantities of product in multiple locations based on demand from consumers, seasonality, and any disruptions that may occur.

“They can utilize 3PLs’ network of warehouses to do this, thus saving themselves high capital expenditures from rent and labor while also not being financially responsible for a building for a long period of time,” he noted.

As for if 3PLs will continue to up their share of bulk industrial leasing activity going forward, Breeze said that is likely, given the highly competitive consumer market and ongoing disruptions in the global supply chain.

“We expect 3PLs to remain the top occupier of bulk space with their market share remaining well over 30% in the coming year,” he said. “It is tough to say how long this will be the case. 3PLs have led bulk market share since 2021, and we do not see this changing anytime soon.