Industrial real estate market poised for growth
Demand for warehouse space will continue to rise, as consumers shift their buying habits and retailers rethink sourcing strategies in the wake of the pandemic.
The industrial sector has become the “darling” of the commercial real estate market, and experts agree it’s likely to continue that way into 2021. A panel of real estate and third-party logistics (3PL) professionals talked about the resilience of the warehousing and logistics sector and the resulting demand for space in the months ahead at this week’s Council of Supply Chain Management Professionals’ (CSCMP) EDGE conference.
The industrial real estate market has been resilient during the pandemic, driving employment and the overall economy, and at least one panelist said the next two years may be “the best ever” for the sector. Accelerated e-commerce activity is driving much of that demand and is simultaneously creating a need for high-tech space that features more automation and robotics. Panelist Augusto Alizo, of 3PL services provider DHL, said automation is a “game changer” in the market, pointing to DHL’s previously announced commitment to invest $300 million in modernizing its facilities with automation, Internet of Things (IoT) technology, and robotics.
Panelist Stephanie Rodriguez, of Duke Realty, agreed and pointed to general demand for more space as companies rethink their just-in-time (JIT) inventory strategies and look for additional space to house particular items or portions of their inventory. A pandemic-induced surge in e-grocery shopping is also driving demand for cold storage space, she said—a trend the panelists said they don’t expect to reverse when the pandemic is over. Other factors driving demand include an increase in online furniture shopping and delivery and a resulting reliance on 3PLs to service those needs, as well as more space for reverse logistics operations, she said.
Alizo is vice president, transaction management for DHL, and Rodriguez is vice president, leasing and development for Duke Realty. Also on the panel were John Lewis, Americas Industrial & Logistics and Retail Leader for CBRE, and Donna Palumbo-Miele, president and CEO for Concordia Supply Chain Group LLC.