Texas, Illinois and Ohio once again lead the Top 10 states for logistics facility projects documented over the past five years by Site Selection’s Conway Projects Database. Chicagoland, Dallas-Fort Worth and Greater Houston hardened their locks as leaders among the Top 10 metros.
The 27,000-acre AllianceTexas development is one catalyst driving No. 2 metro Dallas-Fort Worth’s logistics economy. AllianceTexas reported early this year an estimated $119.8 billion in regional economic impact over the past 35 years, including $9.84 billion in 2023 alone.
Photo courtesy of Hillwood
The data reveal continued surges in distribution center activity in Texas (14.5%) and Pennsylvania (22.1%). Among metro areas, Houston (21%), New York (19.5%) and Los Angeles (18.3%) show the most growth since the five-year totals published here last year. Indicative of the consistency that accrues from our multi-year formula, the states and metros that comprise our Top 10s are unchanged from 2023, with negligible shuffling among their ranks.
Having emerged from the chaos of COVID-19, logistics and distribution strategies are incorporating lessons learned from the breakdown of global supply chains, with a growing emphasis on agility. And with evolving consumer preferences and technological advances driving many investment decisions, sustainability continues to emerge as one of the industry’s top priorities.
Port connections lead the way for Singapore.
Photo: Getty Images
Singapore Rises to the Top Among Global Connectors
DHL and New York University’s Stern School of Business in March released the DHL Global Connectedness Index 2024, an in-depth report analyzing 181 countries and territories to form a picture of the state of globalization and its prospects. The nearly 200 nations examined, says DHL, represent 99.7% of the global economy.
With COVID-19’s most profound effects now fading, the report identifies geopolitical tensions as the top immediate challenge to the global flow of goods, 
capital and information. The United Nations, it notes, reports the largest number of violent conflicts since World War II and a concurrent escalation of big power rivalries over key technologies. Nonetheless, DHL found that cross-border commercial activities remain historically robust.
“Global connectedness reached a record high in 2022 and remained close to that level in 2023,” reads the top conclusion. “The resilience and growth of international flows of trade, capital, information and people in the face of recent crises strongly rebuts the notion that globalization has gone into reverse.”
Singapore, “uniquely positioned to excel in globalization” because of its ports, thriving financial sector and astute development strategies, swaps places with the Netherlands as DHL’s most connected country. Despite the latter’s marginal slip, the emergence of Luxembourg — with Belgium holding down its Top 10 position — add up to a Benelux sweep. Trade between the U.S. and China may have dropped again in 2023, but the two remain connected by larger flows than most every other pair of nations.
“The data show that a fracturing of the world economy along geopolitical or geographic lines is still only a risk rather than a current reality,” said Steven Altman, senior research scholar and director of the DHL Initiative on Globalization at NYU Stern’s Center for the Future of Management. “The resilience of global flows in the face of formidable threats sends a strong message about the value of a connected world. This should motivate leaders to redouble their efforts to expand the benefits of globalization, while better managing its challenges.”
LEED Award for REI in Tennessee
In late July, REI announced that its newest national distribution center had received the prestigious LEED v4 Platinum Certification from the U.S. Green Building Council. The 400,000-sq.ft. facility in Lebanon, Tennessee, began operations last October and employs 275 team members, according to the Seattle-based outdoor retailer. Thirty miles west of Nashville, it’s one of only 10 warehouse facilities in the country to achieve LEED v4 Platinum, whose criteria include sustainable building materials, smart electric and water use, and quantifiable measures of long-term environmental impacts.
REI’s new distribution center in Lebanon, Tennessee, is one of only 10 in the nation to achieve LEED v4 Platinum certification. One of the others is REI’s site in Goodyear, Arizona.
Photo courtesy of REI/Ford Photography
From the outside, REI’s Lebanon facility looks less like a warehouse than an attractive office or retail space. The interior is graced by wood and metal from a barn that once stood at the site, reclaimed by design-build specialist Al. Neyer, which teamed with REI on the project. A man-made stream meanders throughout. The DC utilizes 100% renewable electricity through an onsite solar installation and a separate array in eastern Tennessee, supported in part by REI.
“Our Lebanon distribution center delivered on four guiding principles of people, community, sustainability and technology,” said Ruchi Christensen, REI vice president of distribution and fulfillment operations. “While the LEED Platinum certification highlights our commitment to the co-op’s climate strategy, we are also incredibly proud of the resulting workplace that fosters a sense of belonging through features including a community gathering space, employee gym and engaging outdoor spaces.”
The Tennessee facility serves more than 60 REI stores and 5.6 million online members in the Midwest and Southeast. It’s REI’s fourth national distribution center, joining facilities in Bedford, Pennsylvania; Sumner, Washington; and Goodyear, Arizona, which was the first distribution center in the U.S. to achieve both LEED Platinum certification and Net Zero Energy.
BNSF Pursues Efficiency, Sustainability in SOCAL
BNSF Railway is in the planning stages of a $1.5 billion master-planned rail facility in Southern California, which it describes as the first of its kind developed by a Class I railroad. The 4,500-acre facility aims to improve supply chain efficiency by allowing direct transfer of containers from ships at the Ports of Los Angeles and Long Beach to trains headed to Barstow, where the railroad splits to allow it to serve both Northern California and the Southern California Basin.
Kentucky Gov. Andy Beshear
Photo from Flickr/Andy Beshear
Beshear: Ohio River Bridge “Transformational”
It goes without saying that supply chains don’t develop and evolve without infrastructure, an emerging piece of which is the “NAFTA Superhighway” running North-South from Michigan to Texas, to terminate at the Canadian and Mexican borders. A key cog in this long-pursued vision is I-69 ORX, a bridge across the Ohio River near the highway’s midpoint.
Still in the planning stages with construction set for 2027, the $1.2 billion project to link Evansville, Indiana, to Henderson, Kentucky, is being spearheaded by Indiana Gov. Eric Holcomb and Kentucky Gov. Andy Beshear, with hoped-for support from the federal government. Gov. Beshear spoke with Site Selection about the project’s potential impact.
GOV. BESHEAR: The I-69 project is going to be transformational for portions of Western Kentucky. Right now, we are seeing an economy on fire in the overall Commonwealth, and lots of jobs coming to Western Kentucky in particular. The I-69 project is going to lead to even more economic development in an area that sometimes has felt left out.
Site Selection: This project seems personal to you.
BESHEAR: This project is very important to me. My family’s from Western Kentucky, not far from where I-69 will come through, in fact. So, I’ve seen and know what this is gonna do to many of our towns and cities along it.
More broadly, this is our Eisenhower moment in this country. For far too long, our infrastructure has either crumbled or we haven’t made investments in new infrastructure. The people of Western Kentucky deserve to have an Interstate that comes through and deserve to have the same opportunities as each and every one of our other communities. For a state that’s building the two largest battery plants on planet Earth and bringing in so much of the supply chain — a lot of it coming to Western Kentucky — this is going to help us grasp this opportunity and our potential.
Completion is quite a way off, but you’re moving dirt around. What economic benefits has the project produced to date? And of greater importance, specifically how do you see this project supporting economic growth for that region going forward?
BESHEAR: We already see significant investment. The new Pratt paper plant [$700 million] in Henderson has about 350 jobs that pay almost $40 an hour, and that changes the lives of so many people. And there’s many more of those opportunities to come, whether we are serving as a supplier to different companies that will be up or down I-69 or whether we can land another one of these large plants that can be supplied by existing groups that are already there. It makes Western Kentucky more interconnected with our national economy. This is the last major infrastructure piece outside of broadband that really moves Western Kentucky, I think, to the front of the line of places to locate a business.
Do you see this project as having the potential to help generate another big EV-related project as you’ve seen with Ford and Toyota?
BESHEAR: The I-69 project would create the opportunity to recruit one of those types of companies. What you need is a significant amount of land, maybe rail, utilities and a good electrical supplier. And you can’t really do it without that Interstate or without access to a significant road. So yes, it opens up more such possibilities.
“The vision for this particular location is to help relieve some of the congestion that has taken place at the Ports of LA and Long Beach that really started when COVID hit,” says Lena Kent, the railway’s general director for public affairs.
The Barstow International Gateway (BIG) is to consist of a rail yard, intermodal facility and warehouses for transloading freight from international containers to domestic containers at a strategic location for California and the U.S.
“It’s going to enable our customers to move more of their containers and trailers right onto trains, rather than going by truck to transfer facilities,” says John Lovenburg, BNSF vice president for environment & sustainability. “The net result,” he says, “is less emissions, less congestion and a benefit for our customers and for the communities where we operate.”
Electric trucks are to shuttle among warehouses built with rooftop solar, supporting BNSF’s commitment to reduce its carbon footprint by 30% by 2030. BNSF expects the project to create 20,000 direct and indirect jobs while exerting a major impact on the efficiency of the U.S. supply chain.
“It’s an exciting evolution of what Barstow’s role has always been to BNSF Railway, and that’s connecting one side of the nation’s supply chain to the rest of the country,” says John Gabriel, BNSF’s vice president for network strategy & capacity planning.
Cold Storage goes spec.
Photo: Getty Images
Cold Storage Presents Opportunities
The pandemic produced changes in eating habits that continue to ripple through the supply chain, boosting the demand for cold storage facilities. Concerns about food shortages teamed with minimized trips to grocery stores to trigger widespread stockpiling. Consumers became accustomed to eating at home. With the surge of inflation, frozen foods provided a cost-effective option to perishables. In all, frozen food sales surged by 30%, according to Rick Kingery, food & beverage practice lead at Colliers, the commercial real estate consultancy.
In May, Colliers released a report revealing that low vacancy rates and growing demand for cold storage facilities have pushed developers to build cold buildings on a speculative basis for the first time.
“The opportunities for institutional investors are vast,” Kingery told Site Selection via email in August. “They can support a wide range of projects, from value-added properties to speculative. Additionally, they can provide equity for stabilized assets or forward investments on expiring leases. The price per square foot for cold storage facilities is significantly higher than for ambient storage, allowing institutional investors to deploy larger sums of capital more quickly. This diverse range of opportunities makes the space highly attractive for institutional investors.”
In its survey, which Kingery co-authored, Colliers found that 21 spec cold storage buildings totaling 5.6 million sq. ft. have been built since 2021, with another 15 buildings totaling some 3.4 million sq. ft. currently under construction or about to begin.
“These buildings,” the report states, “have been built by less than 20 developers that specialize in the product type, and feature ceiling clear heights 36’ to 50’, heavy power requirements, wide internal temperature ranges and specialty reinforced floor slabs.”
Karis Cold, based in Naples, Florida, is among the sector’s major players. It has cold storage projects underway in Chicago, Illinois; Denver, Colorado; Jacksonville, Florida; Suffolk, Virginia; and Rock Hill, South Carolina. Others in the space, says Kingery, include RL Cold, Sansone Group, Scout Logistics, Saxum and TI Cold.
“I anticipate continued growth in the spec market,” Kingery says, “driven by an increasing sophistication among developers and a growing number of developers building across the USA. Additionally, more capital partners are entering the space. I expect 2025 to see even more construction starts compared to 2024.”
