The JLL Industrial Research Team has conducted its first-ever study of the top U.S. distribution markets, and found that New Jersey and the New York Metro region ranked No. 1 overall.JLL said it developed and utilized a proprietary model to rank the nation’s major distribution markets. The firm said it “identified and applied 32 specific metrics to weight and rank industrial warehouse and distribution market performance from a supply chain and logistics perspective.”
It then listed nine large markets, which were located near major population centers, and nine secondary markets whose strength may not be reflected in their reputation.
What it dubbed the “front nine,” using a golfing metaphor, were these areas:
- New Jersey/New York Metro Area;
- Southern California;
- Central and Eastern Pennsylvania;
- Chicago Metro (including Milwaukee);
- Dallas/Fort Worth Metroplex;
- The Mideast (Indianapolis, Columbus and Cincinnati);
- The Mid-Atlantic (Baltimore, Washington, D.C., Metro, Richmond and Hampton Roads);
- Southeast Texas (Houston and San Antonio).
JLL said these markets could be considered obvious, as they both dominate from a distribution and site selection aspect, and are well-known in the logistics industry.
New Jersey and New York earned the top spot for a variety of reasons, JLL said.
“The home of some of the most densely populated centroids in the country, the New York and New Jersey Metro Area is also the largest seaport on the East Coast (which could grow with the newly opened expansion of the Panama Canal),” the report said. “It is an immensely important driver of industrial space which cascades down from the Port and Meadowlands submarkets through a corridor of industrial markets that include the big-box hub Exits 8A and 7A submarkets.”
JLL said the area’s diversity of site selection options, as well as its work force and “not extreme” costs offset its higher real estate prices.
Likewise, it said, the proximity to the major Eastern Seaboard cities and the No. 3-ranked Central and Eastern Pennsylvania markets is a plus.
The Top 3 markets “all end up with total scores in our rankings in a tight cluster, and it will be interesting to track their performance over time in subsequent versions of our annual JLL study,” the firm added.
What JLL called the “back nine,” of smaller markets included:
- Honkey Tonk Triangle (Louisville, Memphis, Nashville);
- The Carolinas;
- The Heartland Markets (Kansas City, St. Louis);
- Northern California and Reno;
- The Desert Markets (Las Vegas, Phoenix);
- The Mountain Region (Denver, Salt Lake City);
- The Pacific Northwest.
JLL concluded: “The gap between supply chain strategy and real estate execution is real and exists today. Those companies that work to more closely integrate the two important functions will create competitive advantage.”