November 20, 2019
By Amy Sorter
The industrial real estate sector has been a strong one nationwide, marked by low vacancy rates and high demand. The industrial real estate sector is also one with many segments and facets. Connect Industrial 2019, which took place Nov. 19 in Houston, examined these facets, bringing together experts from across the nation to take a deep dive into the sector, providing insight and invaluable information to attendees at this event.
Following lunch and networking, the conference led with “Trends and Forecasts from Industrial’s Industry Leaders,” which offered 40 minutes of issues ranging from occupiers, to industrial ownership consolidation, to e-commerce. One large focus was on labor within warehouse and manufacturing sectors, with CBRE’s John Morris noting that “in our space, labor is going to continue to be tougher and tougher to identify.”
Next up was the “Evolving Expectations of the Last Mile.” Amid the panelist discussion about getting product to consumer in that last mile came the audience question: What is the last mile? And, are users willing to pay more for a last-mile location? Rob Moriarty from RealTerm indicated that “last mile” encompasses a wide variety of definitions, with many of the users his company speaks with defining the concept as delivery within a 5-to-10-mile radius of a distribution center. Insofar as whether occupiers will pay more for central locations, “the short answer is yes, a lot of users are willing to pay more for that location, where they can efficiently and quickly distribute out of a final-mile location,” he said.
“Cold Storage: The New, Hot Frontier,” had panelists with expertise in food, beverage and – appropriately enough – cold storage, explaining that the very narrow industrial niche is garnering a great deal of attention from developers and, to an extent, institutional investors. Matt Walaszeck with CBRE said “In general, food sales have risen exponentially from grocery, restaurants and fast-food places. This has driven demand for cold storage; we’re seeing a huge amount of capital interest in the space.”
The conference ended with “Rail, Port and Intermodal Services: Moving Makers to Market,” which ran the gamut of whether rail-served locations are a benefit, to how – and if – state and municipal incentives might or might not entice occupiers. Regarding the incentives discussion, panelists were divided, but ultimately, it came down to whether a tenant actually wants to operate from a particular location. “Companies either want to be there or they won’t,” observed McCord Development’s John Flournoy. “They might hem and haw over incentives, but there are other issues . . . they find their operating costs will be higher if they’re in inadequate locations, chasing incentives.”
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