Warehouse tenants who avoided rising rental rates in a hot market are getting sticker shock as their leases expire
Rental rates to replace expiring multiyear warehouse leases are rising at a sharp pace, according to a new report, as real-estate firms look to incorporate the higher prices they have taken during the pandemic into new contracts.
The rate increases, which CBRE compared with long-term contracts up for renewal during the third quarter of this year, have been stronger in the high-demand regions. Rents to replace leases expiring this year in central New Jersey, Philadelphia and the Inland Empire near the ports of Los Angeles and Long Beach were more than 60% higher than rates for leases that started in 2016.
The rising warehouse rental rates are part of a broad increase in costs across supply chains, from the prices of raw materials to the charges for shipping goods. Transportation companies that have been garnering high rates on the sector’s spot markets over the past year now are looking to embed the pricing in longer-term contracts they are negotiating with shippers.