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Home » CBRE: Labor A Chief Concern For Warehouse Owners And Operators
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CBRE: Labor A Chief Concern For Warehouse Owners And Operators

September 5, 2018
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The rapid growth of e-commerce is forecast to create demand for another 452,000 warehouse and distribution workers in the U.S. this year and next, signaling an acceleration of job growth in the already labor-strapped industry, according to a new report from CBRE.

Retailers, delivery companies and third-party logistics firms can react to the labor crunch in any or all of three ways, according to CBRE: recruiting more workers from other industries; investing in automation to enhance labor efficiency; and expanding into markets with ready and available workforces.

Analysis by CBRE Research and CBRE's Labor Analytics Group of federal employment data identified multiple U.S. markets that offer advantageous combinations of availability, quality and cost of labor for warehouses and distribution. Those are led by Memphis, Louisville, California's Inland Empire, Indianapolis, Atlanta, Nashville and Dallas-Fort Worth, among others.

"Increasingly, development of e-commerce warehouses is contingent not only on close proximity to large customer populations but also on finding increasingly scarce labor," said David Egan, CBRE Global Head of Industrial & Logistics Research. "Warehouse users will want to ensure that access to qualified labor is a priority in their considerations for expansion. Several markets, especially those with strong population growth, offer ideal conditions for staffing up distribution centers."

CBRE came to its projection of demand for another 452,000 warehouse and distribution workers in 2018 and 2019 by applying a ratio of one employee per 1,000 sq. ft. of e-commerce distribution space to its forecast for warehouse-construction completions in the U.S. this year and next. That projected demand for 2018-19 exceeds the industry's job growth since 2013 of 180,300 new positions a year, an acceleration that reflects the growing volume of e-commerce sales.

CBRE's report addresses two additional tools for solving the labor crunch. First, investing in more automation - robots in the warehouse and autonomous trucks - can help mitigate labor scarcity by boosting the efficiency of an existing workforce. Some measures forecast the productivity gain in the transportation-and-distribution industry to be as much as 46 percent.

Second, recruiting workers from other industries has worked well for the warehouse-and-distribution sector in recent years. Government data show that the 66 percent increase in workers moving to the transportation-and-warehouse sector from other industries from 2011 to 2015 exceeded the gain rate of any other industry.

Still, that inflow of labor supply isn't enough to meet the demand generated by e-commerce's growth. That shortfall underscores the importance of targeting markets with ideal labor metrics.

"Site selection for today's warehouse users and developers is a complex exercise of weighing trade-offs including speed to customer, transportation costs, location incentives, real-estate economics and labor," said Adam Mullen, Americas Leader for CBRE's Industrial & Logistics business. "The most intelligent site selection efforts never lose sight of the fact that labor accounts for more than 20 percent of total supply chain cost, and up to 75 percent in final-touch distribution. Its importance can't be overstated."

Said Kristin Sexton, Senior Managing Director of CBRE Labor Analytics, "Employers often face significant challenges in assessing a given labor market and how its many facets might apply or not to their companies' needs. But one thing is certain: Labor is a critical resource for most modern employers, especially those in the rapidly expanding and evolving field of distribution and warehousing. Effectively operating in this industry will require smart analysis of labor sources for many years to come."

About CBRE Group, Inc.
CBRE Group, Inc. (NYSE: CBRE), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world's largest commercial real estate services and investment firm (based on 2017 revenue). The company has more than 80,000 employees (excluding affiliates), and serves real estate investors and occupiers through approximately 450 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.

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