Industrial Landlords Desperately Need Workers

Chicago, IL—The growing trend of automation in warehouses is having a ripple effect among retailers and logistics companies—but it is still not entirely meeting the demand for labor in the industrial sector. According to a 2018 CBRE report, “low unemployment and the creation of about 500,000 e-commerce-related jobs since 2010 are impacting the pattern of US industrial real estate development.” With e-commerce primarily driving demand for warehouses, labor availability is the main factor in choosing sites for new facilities.

“Distribution centers are all located very close to each other. Warehouse employees will change jobs for as little as a 75-cent hourly wage increase or a slight cost savings on housing and transportation. Employers are also working to accommodate personal work schedules and ensuring lunch options are nearby,” Bob Smietana, CEO of HSA Commercial Real Estate, tells GlobeSt.com.

Location still matters and site selection is taking this into account even as some warehouse operations transition into more automation. Amazon, for example, is eliminating positions by automating certain processes such as picking and packing. Of course, this equals to less human capital.

“Each machine costs over a $1 million but can eliminate approximately 24 full time human positions,” says Smietana. “It’s the wave of the future. Companies are saying they will repurpose their human employees which is a good thing.”

Assembly line work is hard, repetitive, and not good for your health, hence the automation.

“We will never be fully automated. Employers will never get ahead of the race,” says Smietana.

The good news is that unemployment is at a record low and so employers are getting creative in various ways including retraining felons simply because of a low labor pool supply, Smietana says.

Warehouses are also recalibrating by building directly off the interstates not only because it is good for truck deliveries but because the location is also great for employees to easily commute longer distances. A future trend is also extending rail lines and creating easier and cheaper modes of transportation.

“For example, HSA built Commerce Farms V, a 651,380-square-foot distribution center in Lebanon, Tenn., on a purely speculative basis and it was fully leased in just four months. Commerce Farms’ tenants have found its location advantageous as employees can access the area’s affordable housing stock while benefiting from a shorter commute,” explains Smietana.