We use cookies to provide you with a better experience. By continuing to browse the site you are agreeing to our use of cookies in accordance with our Cookie Policy.
  • INDUSTRY PRESS ROOM
  • SUBMISSIONS
  • MEDIA FILE
  • Create Account
  • Sign In
  • Sign Out
  • My Account
Free Newsletters
  • MAGAZINE
    • Current Issue
    • Archives
    • Digital Edition
    • Subscribe
    • Newsletters
  • STRATEGY
  • GLOBAL
  • LOGISTICS
  • MANUFACTURING
  • PROCUREMENT
  • VIDEO
    • News & Exclusives
    • Viewer Contributed
    • CSCMP EDGE 2022 Startup Alley
    • Upload your video
  • PODCAST ETC
    • Podcast
    • White Papers
    • Webcasts
    • Events
    • Blogs
      • Reflections
      • SCQ Forum
    • Mobile Apps
  • MAGAZINE
    • Current Issue
    • Archives
    • Digital Edition
    • Subscribe
    • Newsletters
  • STRATEGY
  • GLOBAL
  • LOGISTICS
  • MANUFACTURING
  • PROCUREMENT
  • VIDEO
    • News & Exclusives
    • Viewer Contributed
    • CSCMP EDGE 2022 Startup Alley
    • Upload your video
  • PODCAST ETC
    • Podcast
    • White Papers
    • Webcasts
    • Events
    • Blogs
      • Reflections
      • SCQ Forum
    • Mobile Apps
Home » Warehouse demand undeterred by economic turbulence in third quarter

Warehouse demand undeterred by economic turbulence in third quarter

E-commerce growth, rising inventories, and express delivery drive relentless appetite for industrial real estate, reports find.

tishman 17 William Drive.jpg
November 11, 2022
Ben Ames
No Comments

Demand for warehouse space is continuing to soar as retailers and brands hustle to meet simmering demand for e-commerce orders and fast home delivery that has stayed hot despite federal efforts to cool off rising inflation through interest rate hikes.

In one measure of the trend, the industrial real estate firm Tishman Speyer this week launched a joint venture with Mitsui Fudosan America (MFA), the U.S. arm of the $65 billion Japanese real estate firm Mitsui Fudosan Co. Ltd. Fueled by $500 million from MFA and an unspecified investment from Tishman Speyer, the partners plan to acquire, develop, redevelop, and operate industrial properties in certain U.S. cities.

The partnership will focus primarily on major urban centers with dynamic workforces, growing populations, and high barriers to entry, the companies said. They cited examples such as Los Angeles, the New York Metro region, the Puget Sound region, San Francisco Bay Area, Austin, San Diego, Washington D.C., Boston, and Chicago.

“The evolving needs of today’s consumer have generated strong demand for well-located, functional industrial properties. This is especially true in the most supply-constrained urban centers. Through this new joint venture, we intend to create and operate facilities that bring companies closer to their customers,” Tishman Speyer CEO Rob Speyer said in a release.

The new partnership follows a general move by developers to build logistics and fulfillment space closer to densely populated cities instead of less expensive, rural land. That choice can pay off by trimming the distance between DCs and consumers, enabling next-day or even same-day delivery of online orders.

While that migration has been playing out for years, some observers thought that post-pandemic economic conditions like a tight labor pool and uncertain stock market could spook investors. However, analysts say industrial market demand may slacken slightly from its record pace of 2021, but is expected to continue overall.

An “Industrial Occupier Survey” from real estate firm CBRE found that 64% of U.S. companies are planning to expand their real estate footprint over the course of the next three years, despite economic uncertainty. That charge is being led by e-commerce, as shown by red-hot expansion demand reported by 81% of third-party logistics providers (3PLs), as well as 75% of food and beverage firms and 75% of building materials and construction companies.

“The U.S. industrial market is continuing to see robust demand, and companies are adding warehouse and distribution space to protect their inventories, diversify their supply chains, and process growing e-commerce sales,” John Morris, CBRE President of Industrial & Logistics in the Americas, said in a release. “Even with a more challenging economic backdrop, we’re still seeing that companies are interested in expanding their footprints in the short-term.”

An additional proof point came from real estate firm JLL, which said industrial market fundamentals remained sound as the third quarter of 2022 came to an end, despite a loss of momentum in the macroeconomic environment. By another measure, the vacancy rate for industrial property in the third quarter posted its seventh consecutive quarter of decline, sinking to an all-time low of 3.3%, the firm said in its “Q3 Industrial Outlook.”

The main reason that vacancy has sunk to low is that occupancy growth has outpaced the delivery of new warehouse inventory in 10 of the past 12 years, according to the Houston-based real estate firm Transwestern. The engine behind that growth has been e-commerce, which rose from a 4.2% share of total U.S. retail sales in 2010 to 16.4% during the peak of the pandemic, before settling back to 14.5% as of mid-year 2022.

“With more e-commerce came greater sophistication in an attempt to maximize supply chain efficiencies. Retailers moved from a just-in-time model to a ‘just-in-case’ model, expanding their industrial real estate footprints and stocking up on inventory,” Transwestern said in its October report titled “Forecasting the Future of Colossal Warehouse Demand.”


Our new joint venture with Mitsui Fudosan America will allow us to focus on the development, redevelopment & operation of major consumption centers with dynamic workforces, growing populations and high barriers to entry in major US cities. https://t.co/qv32gGtuS5

— Tishman Speyer (@tishmanspeyer) November 9, 2022

U.S. industrial real estate demand is near historic highs. But how long can that last? CBRE surveyed top industrial occupiers nationwide to find out: https://t.co/PGMOwwv6dU pic.twitter.com/DdGeggZnas

— CBRE (@CBRE) November 11, 2022
Warehousing
KEYWORDS CBRE JLL Mitsui Fudosan America (MFA) Tishman Speyer Transwestern Real Estate Services
  • Related Articles

    Shippers’ freight bills soared in the third quarter, U.S. Bank finds

    Hot warehouse demand drove jump in “megawarehouses” in first half of 2022

Ben Ames is Editor at Large and a Senior Editor at Supply Chain Quarterly?s sister publication, DC Velocity.

Recent Articles by Ben Ames

U.S. regulators approve merger of Canadian Pacific and Kansas City Southern

Port of Savannah gains national market share

Norfolk Southern releases two safety plans to prevent future derailments

You must login or register in order to post a comment.

Report Abusive Comment

Most Popular Articles

  • Survey: most Americans unaware that truckers face shortage of parking spaces

  • Postal Service plans to seize items mailed with fake stamps

  • Best practices in logistics sustainability

  • Supply chain executives not yet seeing expected results from technology investments

  • Inflation drops again as interest rate hikes hit home, NRF says

Featured Video

20221107korber large vs

Enhancing Customer Experience with Your Supply Chain Strategy

Viewer Contributed
With the rise of e-commerce, many businesses have had to transform their warehouses to handle online orders in addition to regularly scheduled inventory shipments. This means warehouses need more information than ever before to ensure they can meet customers' needs. As a result, companies need to select warehouse...

FEATURED WHITE PAPERS

  • Guide to Pallet Rack Safety

  • 3PLs: Complete Orders Faster with Flexible Automation

  • A shipper's guide to navigating post-pandemic holiday freight

  • THE NEW WAY TO WAREHOUSE: 4 Innovations in Automation & Robotics to Boost Warehouse Productivity

View More

Subscribe to Supply Chain Quarterly

Get Your Subscription
  • SUBSCRIBE
  • E-NEWSLETTERS
  • ADVERTISING
  • CUSTOMER CARE
  • CONTACT
  • ABOUT
  • STAFF
  • PRIVACY POLICY

Copyright ©2023. All Rights ReservedDesign, CMS, Hosting & Web Development :: ePublishing