East Bay Logistics Trends: Amazon Drives E-Commerce Boom

By Dennis Kaiser

The East Bay has emerged as one of the top logistics markets in the country during the COVID-19 pandemic, primarily as a result of people staying home from their offices. That has translated into new demand from those working or learning from home, and e-commerce companies have gladly responded to fill those needs.

Lee & Associates Craig Hagglund and Jim Martin, a pair of industrial brokers who’ve worked in the East Bay and Central Valley markets for decades, shared their insights about factors that are shaping the area and the trends they see emerging during this most unusual time period.

Hagglund, SIOR, is Managing Principal of Lee & Associates’ Oakland office and serves as Co-Leader of the Industrial Specialty Practice Group. Martin, SIOR, is a Senior Vice President, specializing in industrial and commercial projects in the key Central Valley logistics market.

Both Hagglund and Martin agree that e-commerce, and specifically Amazon, has helped accelerate an East Bay and Central Valley industrial boom. They see a bright future for e-commerce and the supply chain logistics sector as a result.

“It is hard to imagine any slowdown in sight,” Martin says. “E-commerce was already making it hard on retail pre-covid, but combined with COVID19, e-commerce and supply chain logistics are more vital than ever.”

Amazon has claimed multiple sites across the Northern California region, including the East Bay. An example of Amazon’s appetite for space is an 850,000-square-foot build-to-suit nearly complete in Tracy, a new construction start in Stockton of one million square feet, and yet another rumored build-to-suit in Tracy with 50-foot clear height.

Amazon’s existing footprint in the Central Valley is in excess of six million square feet and could exceed eight million by this time next year. Additionally, Michaels recently signed a lease for 900,000 square feet in a brand-new building in Tracy with another 20 acres for trailer storage – all to support their e-commerce and associated logistics operations.

“Amazon continues to be the leading player – leasing both brand new distribution buildings, as well as truck yards both for full size trailers as well as sprinter vans,” says Martin. “E-commerce and supporting transportation and trucking activity have experienced significant increases in activity across the region.”

Activity from within the e-commerce/last mile segment is expected to continue to expand in the East Bay, too. But demand is also coming from other segments beyond Amazon. Hagglund notes he’s seeing other e-commerce-oriented companies and a few food and food delivery-oriented companies active in the market, too. Those include Hello Fresh and United Cold Storage.

The types of spaces e-commerce/last-mile companies are seeking typically lean towards tech-enabled facilities near larger population centers or with the ability to serve metro areas quickly. Hagglund says, “We anticipate seeing more e-commerce-oriented deals and that will drive demand. As a result, it is expected that well located, functioning, modern warehouses will thrive in the post-covid environment.”

Martin is seeing several interesting new developments where e-commerce or fulfillment occupiers are moving into portions of vacated retail big boxes and shopping malls. He notes “that’s a trend to track to see if it gains momentum or if we see it here in Northern California.”

The coronavirus may not have started the shift towards e-commerce, but it has helped fuel its growth and acceptance in 2020. That acceleration in activity so far this year bodes well for future prospects for developers, investors and owners of industrial assets in the East Bay.

For comments, questions or concerns, please contact Dennis Kaiser