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Area Nabs Distribution Centers

By Johanna F. Still, posted Apr 1, 2022
A nationwide trend of retailers setting up distribution centers outside major metropolitan hubs has landed in Wilmington, with the recently announced plans of Lowe's and Amazon. (Photo c/o Amazon)
In the first quarter of 2022, two prolific companies have cemented plans to establish distribution centers several miles outside of Wilmington.
 
Recently, local officials announced that Amazon has plans to build a 142,000-square-foot distribution center to open next year at the Pender Commerce Park, about 10 miles from downtown Wilmington. An even larger project could also be in the works, but officials are mum on confirming the details.
 
In January, Lowe’s Companies (parent of Lowe’s Home Improvement) signed a long-term lease at the International Commerce Center in Brunswick County, with plans to open a 67,000-square-foot cross-dock delivery terminal this fall, 16 miles from downtown.
 
The Lowe’s operation could bring a planned 50 jobs to the region; Amazon’s could add more than 100.
 
The new local trend marks Wilmington’s introduction to the nationwide phenomenon – more prominent in denser urban hubs – whereby major retailers are stationing their logistics operations closer to where people live.
 
Onset by the disruptive rise of e-commerce, retailers are jockeying to ensure their transportation logistics operations are streamlined to support same- or next-day delivery. Lately, voracious consumer spending out of the pandemic disrupted global supply chains that didn’t adequately anticipate the hike in demand. In the fallout, retailers are strategizing how to better position themselves to meet customers’ needs.
 
Bill Early, executive director of Brunswick Business & Industry Development, said his team has seen a bump in inquiries regarding warehouse and distribution space over the past two years. “This area has always, in my opinion, been an ideal location for distribution and warehousing,” Early said, adding that reshoring of manufacturing is another pandemic-induced trend driving demand in this space.
 
2021 was another banner year for the North American industrial and logistics market, according to a report released last month by CBRE. Between 2021 and 2020, leasing activity jumped nearly 29% among all warehouse/distribution centers in North America over 200,000 square feet (the Wilmington market has yet to see a modern warehouse of this scale, though three just shy of that have notably been speculatively developed in recent years).
 
“Occupiers leased an unprecedented amount of industrial space to serve a rapidly growing online consumer base and increase safety stock to counter supply chain disruptions over the past year,” CBRE’s report states.
 
As a secondary market within proximity to Atlanta – regarded as the logistics hub of the Southeast – Wilmington is seeing the trend later than bigger metros have. “It’s a market that is still trying to find its footing,” said Chris Norvell, principal of Edgewater Ventures, a commercial real estate investment firm. “Yes, we have an uptick going – I wouldn’t call it a deluge. I mean, we’re not operating at the level that [primary] markets are.”
 
Many retailers are making aggressive supply chain reorganizations and expansions to remain competitive in an era where the pace and reliability of delivery can serve as consumers’ deciding factor before clicking “place your order.”
 
Over the past decade, e-commerce has eaten up an increasingly larger share of retail sales nationwide; meanwhile, overall retail sales soared last year, up nearly 18% from 2020, according to U.S. Department of Commerce data. Accounting for nearly 15% of all retail sales in the fourth quarter of 2021, e-commerce sales rose 14% year-over-year.
 
“Historically, someone orders something [in Wilmington], it ends up coming from a large distribution center in Atlanta,” Norvell said. “With the way the e-commerce industry has changed, Amazon in particular is trying to make sure they can get that product to you ideally in the same day as you order. That’s what everybody’s striving for.”
 
Norvell’s first phase of the Wilmington Trade Center on U.S. 421, a 157,600-square-foot speculative industrial project, was fully leased early last month. Two local companies, PaperFoam and Coastal Carrier Moving & Storage, will occupy the new class A space. A second phase is in the works, and separately, Norvell is gearing up for a similar facility on land he leased in November at the ILM Business Park.
 
Just minutes from town, the airport-adjacent project is perfect for a last-mile logistics operation, Norvell said, “but it’ll only be a last-mile facility if the tenant that’s in there is using it as one.”
 
The Lowe’s deal rounded out Cameron Management, Jeff Earp and Windsor Commercial’s leases in the first phase of the speculatively constructed International Commerce Center. Two other tenants (Tri-Tech and Precision Swiss) will use the space for assembly and light manufacturing purposes.
 
Hill Rogers, broker-in-charge at Wilmington-based Cameron Management, said he’s seeing more demand for warehouse distribution needs than manufacturing, but added with onshoring on the rise, it wouldn’t surprise him to see manufacturing space needs tick up too. 
 
Rogers pointed out how FedEx Freight’s 2018 move to the Pender Commerce Park fits in as an early indicator of the big-name logistics warehousing trend, but said for the most part, the interest has only risen over the past two years. Betting on that and general warehouse demand is how Rogers’ development team netted three tenants before the International Commerce Center was even completed.
 
“We know there’s demand and we want to stay out in front of it,” Rogers said.
 
The projects wouldn’t be viable without utilities, which New Hanover, Brunswick and Columbus counties worked for years to secure to spur the activity occurring at the Wilmington Trade Center and International Commerce Center today. In 2019, Brunswick County accelerated funding of a water line extension to the park at Early’s request.
 
“Locally, I believe we are seeing more interest as a result of investments made by our counties to complete infrastructure to the sites on U.S. Highways 74/76,” Early said. 
 
Construction on a second phase of the International Commerce Center will begin before the year ends, according to Rogers.
 
“I do see more growth,” Rogers said. “What’s the absorption going to be? A couple hundred thousand feet per year for the next few years? I certainly hope so. Maybe even more.”
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