By: Charlie Ripple, Industrial Leasing
From April 25 – 28, over 600 Cushman & Wakefield industrial brokers, along with the largest industry owner/developers, all descended upon Chicago for presentations on market research, panels on developing trends and networking conversations (mostly over cocktails). The mood of the event was optimistic for the continued growth and expansion of the national Industrial sector, tempered with a few overarching concerns (think geo-political upheaval and potential trade wars.)
At this point in the current commercial real estate cycle, it’s fairly common knowledge that industrial real estate is the hottest section within the CRE world. As more and more consumers turn to the internet for not only their whimsical shopping needs (in my house anything Paw Patrol), but also for daily consumer goods (pet food, groceries, and paper products), the need for warehouse space to ship to these consumers continues to grow. Somewhat surprisingly, today eCommerce only accounts for 9% of total retail sales globally, meaning we are just in the beginning stages of this consumption shift. In order to accommodate these changing consumption patterns (and the 2 billion millennials hitting prime spending years), over 2.3 billion square feet of new warehouse space will be required by 2035.
To meet this increased demand, developers are faced with the continued challenge of either finding developable land or repurposing existing product that needs to be within a relatively short distance from population centers. Consumers are expecting their online orders to be delivered faster and faster and these expectations will only continue to increase.
In addition, as the eCommerce sector continues to grow, the downward pressure on multi-tenant buildings and their occupiers continues to expand. Tenants looking to grow from something like 20,000 to 50,000 square feet are finding it tougher to find suitable space with overall vacancy rates hovering below 6% across the country. Developers are now faced with the option of building one large box on a site or multiple smaller buildings. While site factors and tenant demand often dictate the outcome, either option continues to have strong fundamentals.
The 2018 Chicago Cushman & Wakefield conference was a great opportunity to learn of national trends, network with other industry pros and spend time in a great city. We even found time to see a Cubs win! Hopefully these positive trends continue and the industrial sector stays strong.
Charlie Ripple is a Director on the Charlotte Industrial Leasing team. He provides tenants, landlords, buyers and sellers with a wide range of brokerage services with a focus on distribution
center, flex and manufacturing real estate.