Industrial Tenants Press On Despite Uncertainty
Led by 3PL providers and food and beverage and building materials companies, occupiers are expanding.
Industrial and logistics occupiers are expected to continue expanding into 2023 despite looming economic uncertainty, according to a new report from CBRE.
Led by third-party logistics (3PL) providers and food and beverage and building materials companies, occupiers are racing forward with expansion plans, with a long list of specific space demands including clear height, number of dock doors, power supply, expansion capacity and column spacing.
CBRE surveyed 100 major industrial occupiers throughout the U.S. on their upcoming plans and found that occupiers are pushing forward primarily in the Southeast, Southwest and Midwest regions, “but are facing challenges due to supply chain disruptions, labor shortages and high occupancy costs,” according to the report. Sixty-four percent of respondents plan to expand their U.S. logistics footprint, while 47% percent plan to expand by more than 10%. And 81% percent of 3PLs plan to expand their footprint over the next three years, while 75% of both F&B and building materials & construction companies will do the same.
“Over a third of respondents plan to expand in the Southeast over the next 12 to 24 months, as the region has several large logistics hubs serving growing population centers, large affordable labor forces and seaport connectivity,” the report notes. “This region also benefits from a supportive business climate for manufacturers. Growing industrial markets like Atlanta, Nashville, Orlando, Charleston and Charlotte are attracting occupiers in need of more warehouse or manufacturing facilities.”
Reno, Phoenix and Minneapolis are also increasingly desirable for occupiers due to their strong demographics and infrastructure, according to CBRE.
When it comes to site selection, nearly three-fourths (74%) of respondents to the CBRE survey said rents were the top factor when selecting a building within a market, followed by lease options (50%), transportation (47%) and building design (45%). Concerns about rent were highest in the Northwest and Northeast, followed closely by the Southwest.