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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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CoreWeave CEO says Core Scientific ‘not a need to have’ as shareholder opposition to deal rises

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CoreWeave CEO says Core Scientific 'not a need to have' as shareholder opposition to deal rises

CoreWeave Inc. signage in Times Square in New York, US, on Friday, May 9, 2025.

Yuki Iwamura | Bloomberg | Getty Images

CoreWeave CEO Michael Intrator told CNBC Tuesday that the firm’s proposed acquisition of Core Scientific would be a “nice to have” rather than a necessity as shareholders prepare to potentially block the deal.

In July, AI cloud provider Coreweave proposed an all-stock deal valued at around $9 billion to buy the Bitcoin miner and data center firm, Core Scientific. Immediately after the news, Core Scientific’s stock price fell, plummeting nearly 18%.

The deal has received criticism with key proxy advisor Institutional Shareholder Services (ISS) recommending on Monday that shareholders vote against the acquisition. Core Scientific’s share price has conitnued to rise after the deal was announced which suggests some investors think that the company is valued higher than what CoreWeave has offered, ISS said.

Intrator said that he was “disappointed” by the ISS report and continues to believe that the deal is “in the long-term interest of Core Scientific shareholders.” However, CoreWeave will not raise the price of the offer.

“We think that the bid that we put out there for [Core Scientific] is a fair representation of the relative value of the two companies as an all stock deal,” Intrator told CNBC. “We are going to just kind of proceed as we have, in the event that the transaction does not go through. It is a nice to have, not a need to have for us.”

“Everything has a value, and the number we put out is the value we’re willing to pay for them under all circumstances,” Intrator added.

CoreWeave CEO calls Core Scientific a 'nice to have' amid rising opposition to the acqusition

Earlier this month Two Seas Capital, a major Core Scientific shareholder publicly opposed the acquisition saying that the price CoreWeave is offering is too low. Shareholders will vote on the deal on October 30.

“We see no reason why Core Scientific shareholders should accept such an underwhelming deal. Based on recent trading data, we see little evidence that they will,” Two Seas Capital said in a Friday letter to shareholders.

CoreWeave has aggressive pursued acqusitions this year to buy AI-related firms like OpenPipe, Weights & Biases, and Monolith as it looks to expand its product offering.

The company, which has built data centers and offers Nvidia-powered computing power to hyperscalers like Microsoft, has been riding the wave of artificial intelligence investments.

“We’ve been in acquisitive mode as we continue to build and extend the functionality of our company,” Intrator said.

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CNBC Daily Open: More people want the new iPhone — and Apple shares

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CNBC Daily Open: More people want the new iPhone — and Apple shares

Apple CEO Tim Cook holds new iPhones during an Apple special event at Apple headquarters on Sept. 9, 2025 in Cupertino, California.

Justin Sullivan | Getty Images

Critics may sneer at the iPhone 17 Pro’s fluorescent orange finish, but Apple’s “Cosmic Orange” smartphone seems to be dazzling where it counts — in sales and shares.

The newest iPhone 17 series, which includes the base iPhone 17 and its overachieving Pro and skinny Air siblings — that come in colors other than orange, to be clear — has been outselling its predecessor in the U.S. and China, according to Counterpoint Research. In China, the iPhone Air reportedly sold out within minutes of going on sale, per the South China Morning Post.

Investors noticed. Shares of Apple popped nearly 4% on the news and closed at an all-time high. That must be welcome news for CEO Tim Cook and investors for a stock that’s been trailing its Magnificent 7 peers. That brings Apple’s year-to-date gains to around 5%, compared with Nvidia’s 36% and 25% for Meta.

Another member of the Mag 7, however, had a bumpy Monday. Amazon’s cloud arm, Amazon Web Services, suffered an outage that took down sites such as Reddit and Snapchat, plunging millions, including yours truly, into existential crises. Still, Amazon shares managed to climb around 1.6%.

U.S. markets also rose more broadly, with major indexes ending Monday in the green. This week, investors will be keeping their eye on the U.S.’ trade developments with China as well as earnings reports from companies such as Netflix, Tesla and Intel — a mix that could make the next few days almost as colorful as Apple’s latest phone.

What you need to know today

And finally…

Liquid cooled servers in an installation at the Global Switch Docklands data centre campus in London, UK, on Monday, June 16, 2025.

Bloomberg | Bloomberg | Getty Images

AI set to be a boon for emerging markets — but some investors aren’t convinced

“AI will change everything for emerging markets,” said Anton Osika, CEO and co-founder of Swedish startup Lovable, which allows others to create apps and websites via prompting, removing the need for technical knowledge. 

However, AI doesn’t solve structural challenges faced by emerging markets. That means plenty of points of friction still exist, such as local funding availability and confidence that startups will secure revenue, according to Emmet King, managing partner and co-founder of J12 Ventures, an investment firm.

— Tasmin Lockwood

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Shares of Australian critical metal companies surge on $8.5 billion U.S. minerals deal

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Shares of Australian critical metal companies surge on .5 billion U.S. minerals deal

U.S. President Donald Trump, and Anthony Albanese, Australia’s prime minister, shake hands outside the West Wing of the White House in Washington, DC, US, on Monday, Oct. 20, 2025.

Bloomberg | Bloomberg | Getty Images

Shares of some of Australia’s largest critical metals and rare earths companies surged on Tuesday following the announcement of a massive minerals deal between Washington and Canberra worth up to $8.5 billion.

The agreement — signed by U.S. President Donald Trump and Australian Prime Minister Anthony Albanese on Monday — includes funding for multiple projects aimed at boosting the supply of key materials used in defense manufacturing and energy security.

Lynas Rare Earths, Australia’s largest rare earths producer by market capitalization, jumped about 4.7% in early Asia trading. Mineral sand miner Iluka Resources advanced more than 9% while lithium producer Pilbara Minerals added roughly 5%.

Other smaller rare earth miners also made gains, with VHM soaring around 30%, while Northern Minerals popped over 16%. Meanwhile, Latrobe Magnesium, Australia’s primary producer of the critical metal magnesium, rose nearly 47%. 

NYSE-listed Alcoa, which is developing a project in Western Australia to recover and refine the critical metal gallium, was identified as one of the two priority projects under the new minerals deal. Washington will make an equity investment in the initiative.

Shares of Alcoa, also traded on the Australian Securities Exchange through depositary receipts, rose nearly 10%.

Rare earths and critical metals are essential for high-tech products such as electric vehicles, semiconductors and defense equipment. 

China, the global leader in the production of rare earths and many other critical minerals, has tightened export controls on the materials amid a trade war with the U.S., accelerating international efforts to diversify global supply chains. 

Albanese said the two countries will each contribute $1 billion over the next six months for projects that are “immediately available.”

However, a White House fact sheet later stated that Washington and Canberra will invest more than $3 billion in critical mineral projects over the same period, describing the agreement as a “framework.”

The White House also said that the Export-Import Bank of the United States will issue seven letters of interest for more than $2.2 billion in financing, potentially unlocking up to $5 billion in total investment.

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