A growing share of U.S. warehouse activity is moving toward inland distribution hubs as shippers look for lower operating costs, according to commercial real estate research. But industry researchers caution that changing freight routes does not necessarily mean companies are relocating their storage networks.
Cushman & Wakefield reported that demand has increasingly favored inland industrial markets over the past two years. Port-market vacancy stood 110 basis points above the national average of 6.6%, while inland markets accounted for 83% of industrial absorption—their highest share since 2010.
Why inland hubs appeal
More goods are traveling by truck or rail directly to inland distribution centers, where labor, rent, and energy costs are often lower. Rising imports from Mexico have also strengthened demand for facilities that can serve distribution networks without goods first moving through a U.S. seaport.
Cost pressure is adding urgency. Diesel price increases tied to the Iran war have raised transportation expenses, prompting shippers to look for savings elsewhere in their networks.
CBRE Senior Managing Director John Kirkman told Supply Chain Dive that clients are also pursuing newer, higher-quality facilities. He said there is now more newer Class A inventory inland, making those markets better positioned for upgrades such as automation.
Port markets are not fading
Despite the inland gains, Cushman & Wakefield expects demand to strengthen and vacancies to tighten in several port markets, including Hampton Roads, Virginia; Savannah, Georgia; Charleston, South Carolina; and Los Angeles. The firm forecasts rent growth above 5% through 2028 in seven of 13 major North American port industrial markets.
Prologis researcher Melinda McLaughlin told the publication that higher port-market vacancy alone does not prove companies are broadly shifting warehouses inland. While rail and trucking can be more attractive on some long-distance routes as trucking costs rise, she said changing how goods travel does not necessarily change where they are stored.
Demand remains active
Prologis data indicates goods continue moving through U.S. warehouses at a healthy pace, with activity rising across e-commerce, manufacturing, and retail. Advanced manufacturing and data-center suppliers are also adding to logistics demand.
Still, businesses remain cautious about inventory levels. McLaughlin noted that companies are keeping inventories lean, so stronger warehouse activity does not necessarily signal stockpiling or a broad move of inventory inland.
Inland warehouses gain ground, but the shift may be more nuanced
