The pandemic lockdowns fueled dramatic growth in both e-commerce and warehouse space. And while global conditions have changed, a recent survey shows that demand for logistics space in the United States remains strong.
Demand for Logistics Space Still Strong Despite Economic Headwinds
CBRE, the world’s largest commercial real estate services and investment firm, carried out a survey among 100 major American industrial occupiers. The key finding is that occupiers are still expanding, particularly in the Southwest (including Southern California), Southeast, and Midwest.
According to the survey, the majority (64%) of industrial occupiers plan to expand their logistics footprint in the United States. 47% plan to expand by more than 10%, while 29% expect no change, and 7% are planning to downsize.
By dividing the respondents by industry, we can get a more granular view of the situation. 81% of third-party logistics companies said they plan to expand their real estate footprint over the next three years, while 75% of both food & beverage and building materials & construction companies will do the same.
As for the obstacles to growth, respondents cited three main factors: labor and skill shortages (61%), rent escalation due either to new leases or renewal (58%), and cost escalations such as the increased cost of fuel or transportation (48%). Other relevant concerns included lack of suitable warehouse space and inflexible lease options.
Also of interest to CRE professionals, the survey inquired about the building features that are most important to occupiers when selecting a new warehouse.
According to respondents, the five most important factors are clear height (81%), power supply (81%), capacity for expansion (76%), number of loading bays/dock doors (76%), and column spacing (76%).
The survey also asked respondents about which region they are looking to expand in over the next 12 to 24 months. The Southeast topped the list with 33% of responses, followed by the Southwest and Southern California, with 28% each.
Looking for more information to make sense of the current CRE landscape? Be sure to read our previous blogs, “US Manufacturers Are Reshoring Their Production Lines” and “Gyms Become Popular Tenants in the Post-Pandemic World.”
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