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ShipBob fulfillment center in Moreno Valley, California
ShipBob

After ShipBob decided last July to let staffers work from anywhere, the logistics start-up had its landlord erect a wall in the middle of its Chicago headquarters so half the space could be rented out to another company.

On March 1, the office reopened at reduced capacity for socially distanced meetings.

But while it’s using less office space, ShipBob’s real estate needs have been expanding at a breakneck pace. The company, which provides fulfillment services to online retailers, has more than doubled its warehouse count since mid-2020 to 24 locations today, including four outside the U.S., with plans to reach 35 by the end of 2021.

The seven-year-old company is a microcosm of the U.S. commercial real estate market. While office vacancies have soared as employers prepare for a post-Covid future of distributed work, the industrial market is hotter than ever because of a pandemic-fueled surge in e-commerce and increased consumer demand to get more products at Amazon-like speeds.

Vacancy rates in industrial buildings are near a record low and new warehouses can’t get built quickly enough to meet the needs of clothing makers, furniture sellers and home appliance manufacturers. Real estate firm CBRE said in its first-quarter report on the industrial and logistics market that almost 100 million square feet of space was absorbed in the period, the third-highest amount ever, and that a record 376 million square feet is under construction.

Rents rose 7.1% in the quarter from the same period a year earlier to an all-time high of $8.44 per square foot, CBRE said. The firm wrote in a follow-up report last month that prices in coastal markets near population centers and inland port hubs are soaring by double-digit percentages. In Northern New Jersey, average base rent for industrial properties jumped 33% in May from a year earlier, and California’s Inland Empire saw an increase of 24%, followed by Philadelphia at 20%.

“The need to have facilities in these markets, coupled with record low vacancy rates, has often led to bidding wars among occupiers that are driving up rental rates,” CBRE said.

Skyrocketing prices

The wheels were well in motion before Covid-19 hit the U.S. in early 2020. Amazon was already turning next-day delivery into the default option for Prime members, and big box stores like Best Buy and Walmart were racing to add fulfillment space to try and keep pace.

The pandemic accelerated everything. Consumers were stuck at home and ordering more stuff, while physical stores had to go digital to stay afloat.

Grocery delivery added to the market tightness, as Instacart and Postmates were suddenly inundated with orders from customers who didn’t want to enter a Costco, Albertsons or Kroger store. Instacart is now planning a network of fulfillment centers loaded up with cereal-picking robots, according to Bloomberg, and Target has bolstered same-day fulfillment through so-called sortation centers.

In addition to the rapid change in consumer behavior, the pandemic also exposed the fragility of the global supply chain. With facilities in China and elsewhere shuttered, stores experienced dramatic shortages of apparel, car parts and packaging materials.

Retailers responded by securing more storage space to mitigate the impact of future shocks, said James Koman, CEO of ElmTree Funds, a private equity firm focused on commercial real estate.

“The reshoring of manufacturing is gaining momentum,” Koman said. Companies are “bringing more products onshore and need to have room for their products so we don’t fall into another situation like we’re in right now.”

All of those factors are contributing to skyrocketing prices, he said. Additionally, construction costs are higher because of inflation and supply constraints, and companies are building more sophisticated facilities, filled with robots.

“You have these automatic forklifts, conveyor belts, and automated storage retrieval systems,” Koman said. “All this is where the world is going.”

Amazon introduces new robots named Bert and Ernie to fulfillment center operations.
Source: Amazon Inc.

Betting on a long-term need for fulfillment and logistics facilities, ElmTree has acquired about $2 billion worth of industrial space over the past seven months, outpacing prior years, Koman said. He estimates the U.S. will need an additional 135-150 million square feet annually to support e-commerce growth.

For ShipBob, the e-commerce boom has played right into its business model. But competition for space is simultaneously forcing the company to reckon with higher costs.

ShipBob works with brands like perfume company Dossier, powdered energy drink maker Juspy and Tom Brady’s sports and fitness brand TB12, providing a wide network of fulfillment centers for fast and reliable shipping and software to manage deliveries and inventory.

Unlike the retail giants, ShipBob doesn’t go after large football field-sized fulfillment centers, and only has leases at a few of its facilities. Rather, it looks for warehouses that are typically family-owned with 75,000-100,000 square feet and some unused capacity. It then outfits them with ShipBob technology and pays based on order volume and the amount of space it uses.

While ShipBob isn’t signing leases, it is competing for space in warehouses that are now sitting on much more valuable property than they were a year ago. ShipBob CEO Dhruv Saxena said that his company has to be in areas like Southern California and Louisville, Kentucky, a major transportation and logistics hub, despite the rapid increase in prices.

“We have to find ways of placing inventory closer to the end customer even if it comes at a lower margin for us,” Saxena said in an interview late last month after his company raised $200 million at a valuation topping $1 billion.

ShipBob competes directly with a number of fulfillment outsourcing start-ups, including ShipMonk, Deliverr and Shippo. Those four companies have raised almost $900 million combined in the past year.

Not just Amazon

Saxena said a major reason smaller retailers turn to ShipBob is to avoid the costs and hassle of finding fulfillment space and hiring the requisite workers. He likened it to companies outsourcing their computing and data storage needs to Amazon Web Services and paying for how much capacity they use rather than leasing their own data centers.

“The same math applies,” Saxena said. “I can open a warehouse, hire people and rig the software or I can convert those fixed costs into variable costs where I pay on a transaction basis.”

ShipBob employees with CEO Dhruv Saxena in middle
ShipBob

Nate Faust is in the very early stages of building Olive, an e-commerce start-up that’s working with brands to offer more sustainable packaging and delivery options by using recycled boxing materials and bundling items.

Olive opened its first two 30,000 square foot warehouses last year, one in New Jersey and the other in Southern California. Faust, who previously co-founded Jet.com and then worked at Walmart after the acquisition, said if he were entering those leases today, they’d easily be 10% to 15% higher.

Olive isn’t actively in the market for more fulfillment centers and doesn’t face a lease renewal until February, but Faust said start-ups have to be opportunistic. He’s working with real estate firm JLL, which he said is constantly on the prowl for attractive space.

“We have them looking all the time because industrial space is so tight right now,” Faust said. “If we find something perfect for what we’re looking for, it’s not unreasonable to have overlapping leases.”

Olive package
Olive

Vik Chawla, a partner at venture firm Fifth Wall, which invests in property technologies, said the challenges in the real estate market are driving more emerging brands and sellers to the outsourcing model.

“It’s very difficult as a single e-commerce business to try to secure attractive space and run your business,” Chawla said. “The line of people trying to get into industrial buildings is out the door.”

Many tenants occupying that line are traditional big third-party logistics providers (3PLs), like C.H. Robinson and XPO Logistics as well as UPS and FedEx. At the top end of the market, Amazon, Walmart and Target are mopping up space to speed distribution and, in Amazon’s case, to manage fulfillment for its massive marketplace of third-party sellers.

Prologis, the largest U.S. owner of industrial real estate, said in a May report that utilization rates, which indicate how much space is being used, reached close to 85%. Vacancy rates are at 4.7%, close to a record low, the company said.

Amazon is the real estate firm’s biggest customer, occupying 22 million square feet, followed by Home Depot at 9 million and then FedEx and UPS, according to Prologis’ latest annual report. Walmart is seventh.

In April, an analyst on Prologis’ earnings call asked what types of clients were most actively pursuing leases.

“E-commerce is a big component of it, but it’s certainly not all about Amazon,” Michael Curless, Prologis’ chief customer officer, said in response. “Certainly, they’re the most active customer. But we’re seeing a lot of activity from the Targets, the Walmarts, Home Depots, and lots of evidence of the Chinese players making their way to the U.S. and Europe as well.”

WATCH: EY on how Covid has boosted digitalization in the retail industry

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Navan sets price range for IPO, expects market cap of up to $6.5 billion

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Navan sets price range for IPO, expects market cap of up to .5 billion

FILE PHOTO: Ariel Cohen during a panel at DLD Munich Conference 2020, Europe’s big innovation conference, Alte Kongresshalle, Munich.

Picture Alliance for DLD | Hubert Burda Media | AP

Navan, a developer of corporate travel and expense software, expects its market cap to be as high as $6.5 billion in its IPO, according to an updated regulatory filing on Friday.

The company said it anticipates selling shares at $24 to $26 each. Its valuation in that range would be about $3 billion less than where private investors valued Navan in 2022, when the company announced a $300 million funding round.

CoreWeave, Circle and Figma have led a resurgence in tech IPOs in 2025 after a drought that lasted about three years. Navan filed its original prospectus on Sept. 19, with plans to trade on the Nasdaq under the ticker symbol “NAVN.”

Last week, the U.S. government entered a shutdown that has substantially reduced operations inside of agencies including the SEC. In August, the agency said its electronic filing system, EDGAR, “is operated pursuant to a contract and thus will remain fully functional as long as funding for the contractor remains available through permitted means.”

Cerebras, which makes artificial intelligence chips, withdrew its registration for an IPO days after the shutdown began.

Navan CEO Ariel Cohen and technology chief Ilan Twig started the company under the name TripActions in 2015. It’s based in Palo Alto, California, and had around 3,400 employees at the end of July.

For the July quarter, Navan recorded a $38.6 million net loss on $172 million in revenue, which was up about 29% year over year. Competitors include Expensify, Oracle and SAP. Expensify stock closed at $1.64on Friday, down from its $27 IPO price in 2021.

Navan ranked 39th on CNBC’s 2025 Disruptor 50 list, after also appearing in 2024.

WATCH: Brex CEO on Navan partnership

We developed 'best in class' enterprise travel expense solution, says Brex CEO on Navan partnership

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Tech megacaps lose $770 billion in value as Nasdaq suffers steepest drop since April

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Tech megacaps lose 0 billion in value as Nasdaq suffers steepest drop since April

Jensen Huang, CEO of Nvidia, speaking with CNBC’s Jim Cramer during a CNBC Investing Club with Jim Cramer event at the New York Stock Exchange on Oct. 7th, 2025.

Kevin Stankiewicz | CNBC

Shares of Amazon, Nvidia and Tesla each dropped around 5% on Friday, as tech’s megacaps lost $770 billion in market cap, following President Donald Trump’s threats for increased tariffs on Chinese goods.

With tech’s trillion-dollar companies occupying an increasingly large slice of the U.S. market, their declines send the Nasdaq down 3.6% and the S&P 500 down 2.7%. For both indexes, it was the worst day since April, when Trump said he would slap “reciprocal” duties on U.S. trading partners.

After market close on Friday, Trump declared in a social media post that the U.S. would impose a 100% tariff on China and on Nov. 1 it would apply export controls “on any and all critical software.”

Amazon, Nvidia and Tesla all slipped about 2% in extended trading following the post.

The president’s latest threats are disrupting, at least briefly, what had been a sustained rally in tech, built on hundreds of billions of dollars in planned spending on artificial intelligence infrastructure.

Read more CNBC tech news

In late September, Nvidia, which makes graphics processing units for training AI models, became the first company to reach a market cap of $4.5 trillion. Nvidia alone saw its market capitalization decline by nearly $229 billion on Friday.

OpenAI counts on Nvidia’s GPUs from a series of cloud suppliers, including Microsoft. OpenAI is only seeing rising demand.

In September it introduced the Sora 2 video creation app, and this week the company said the ChatGPT assistant now boasts over 800 million weekly users. But Microsoft must buy infrastructure to operate its cloud data centers. Microsoft’s market cap dropped by $85 billion on Friday.

The sell-off wiped out Amazon’s gains for the year. That stock is now down 2% so far in 2025. It competes with Microsoft to rent out GPUs from its cloud data centers, but it doesn’t have major business with OpenAI. The online retailer is now worth $121 billion less than it was on Thursday.

“There continues to be a lot of noise about the impact that tariffs will have on retail prices and consumption,” Amazon CEO Andy Jassy told analysts in July. “Much of it thus far has been wrong and misreported. As we said before, it’s impossible to know what will happen.”

Tesla, which introduced lower-priced vehicles on Tuesday, saw its market capitalization sink by $71 billion.

The automaker reports third-quarter results on Oct. 22, with Microsoft earnings scheduled for the following week. Nvidia reports in November.

Google parent Alphabet and Facebook owner Meta fell 2% and almost 4%, respectively.

WATCH: Pres. Trump: Calculating massive increase of tariffs on Chinese products into U.S.

Pres. Trump: Calculating massive increase of tariffs on Chinese products into U.S.

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Govini, a defense tech startup taking on Palantir, hits $100 million in annual recurring revenue

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Govini, a defense tech startup taking on Palantir, hits 0 million in annual recurring revenue

Govini, a defense tech software startup taking on the likes of Palantir, has blown past $100 million in annual recurring revenue, the company announced Friday.

“We’re growing faster than 100% in a three-year CAGR, and I expect that next year we’ll continue to do the same,” CEO Tara Murphy Dougherty told CNBC’s Morgan Brennan in an interview. With how “big this market is, we can keep growing for a long, long time, and that’s really exciting.”

CAGR stands for compound annual growth rate, a measurement of the rate of return.

The Arlington, Virginia-based company also announced a $150 million growth investment from Bain Capital. It plans to use the money to expand its team and product offering to satisfy growing security demands.

In recent years, venture capitalists have poured more money into defense tech startups like Govini to satisfy heightened national security concerns and modernize the military as global conflict ensues.

The group, which includes unicorns like Palmer Luckey’s Anduril, Shield AI and artificial intelligence beneficiary Palantir, is taking on legacy giants such as Boeing, Lockheed Martin and Northrop Grumman, that have long leaned on contracts from the Pentagon.

Read more CNBC tech news

Dougherty, who previously worked at Palantir, said she hopes the company can seize a “vertical slice” of the defense technology space.

The 14-year-old Govini has already secured a string of big wins in recent years, including an over $900-million U.S. government contract and deals with the Department of War.

Govini is known for its flagship AI software Ark, which it says can help modernize the military’s defense tech supply chain by better managing product lifecycles as military needs grow more sophisticated.

“If the United States can get this acquisition system right, it can actually be a decisive advantage for us,” Dougherty said.

Looking ahead, Dougherty told CNBC that she anticipates some setbacks from the government shutdown.

Navy customers could be particularly hard hit, and that could put the U.S. at a major disadvantage.

While the U.S. is maintaining its AI dominance, China is outpacing its shipbuilding capacity and that needs to be taken “very seriously,” she added.

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