Greater Philly region shows highest mega-warehouse growth since 2010, report finds

Areas surrounding Philadelphia have seen the country's fastest growth of jumbo-sized warehouses, thanks to nearby concentrations of online shoppers, according to research from real estate services firm CBRE.

The greater Philadelphia region, which includes Delaware, South Jersey, and a large swath of Southeastern Pennsylvania, added more new warehouses of at least one million square feet between 2010 and 2016 than any other region in the United States, CBRE said in a report on Monday.

During that time, 16 of the massive warehouses, accounting for 19.7 million square feet of space, were completed in greater Philadelphia, the report said.

The next-highest performer was the Inland Empire region of Southern California, which saw the construction of 13 new buildings of one million square feet or more, for a total of 15.4 million square feet.

Online retailers are increasingly seeking distribution-center space in the extended Philadelphia region because of its proximity to the large population centers along the East Coast between Boston and Washington, said Sean Bleiler, an industrial real estate specialist with CBRE in Allentown.

The greatest concentrations of big distribution centers around Philadelphia are in the Lehigh Valley and in southern Harrisburg, Bleiler said.

"Customers wanting products the same day [they are ordered] has really driven the size and location of these facilities," he said.

In all, 117 such facilities were built nationwide from 2010 to 2016 for a total of 141.2 million square feet, according to the CBRE report. That's an increase from 99 facilities built between 2003 and 2009.

Growth of online shopping is helping drive the construction of massive warehouses, because  e-commerce users typically need two to three times as much distribution space as traditional users, according to the report. That's mostly because e-commerce fulfillment requires more inventory, labor and automation, CBRE said.

Five more of the large warehouses are currently under construction in areas surrounding Philadelphia, accounting for an additional 5.4 million square feet of space, according to the report.

"Investment funds have really approved this market as a place where they can put their money to work," Bleiler said.