Norm's Top 10 Takeaways From the 2022 Colliers National Industrial Conference
A few weeks ago, I had the pleasure of attending the 2022 Colliers National Industrial Conference, where industrial real estate professionals gather annually to share industry expertise. I always come away from these events with a deeper understanding of the dynamics at play in our industry. Topics covered this year included global supply chain shocks, evolving the warehouse for unprecedented e-commerce demand, tightening labor markets, and capital markets. My top 10 takeaways from the conference were:
Although the economy has slowed, the demand for industrial real estate is expected to increase by 50% through 2025. This is partially being driven by onshoring.
Rents continue to increase for occupiers due to high land cost, construction costs and increasing interest rates.
Developers are “pencils down” on new land acquisitions in all but the top 10 primary markets until Q2 2023.
Transportation costs can make up 50% of supply chain operating costs for manufacturers and distributors. Truckload Freight rates have been coming down but, on a fuel-adjusted basis, have been flat for the last 12 months. Fully burdened Parcel rates have been increasing.
The cost for shipping containers from China to the US has dropped by +70% in 2022. Container freight is coming down because it is correcting from the escalated pricing and the pandemic.
Developers are having difficulty determining exit cap rates based on the increasing cost of debt.
3PLs have re-established their position as the #1 occupier of industrial bulk space, followed by retailers and e-commerce companies.
Capital markets' volume has diminished significantly due to interest rate increases and long-term rate uncertainty.
There is plenty of equity in the market for development, but not debt. Lenders are already applying new restrictions like borrower recourse and loan-to-value ratios.
Within the four walls of their facilities, 92% of [recently surveyed Modex attendees] plan to evaluate robotics use cases in the next 2 years and most companies expect to see a 3-year ROI or less depending on the specific solution.