SALES, RENTALS & LAYAWAYS

PROTECTING EVERYTHING THAT HAS EVER BEEN OF VALUE TO YOU

Open 24/7/365

We Have A Life-Time Warranty /
Guarantee On All Products. (Includes Parts And Labor)

Real-Estate Firms Expect Coronavirus-Driven Shifts Will Spur Warehouse Demand

Near-term economic shocks seen giving way to changing needs, bigger inventories to meet consumer markets. Real-Estate Firms Expect Coronavirus-Driven Shifts Will Spur Warehouse Demand

Industrial real-estate operators expect the disruption of consumer supply chains caused by the coronavirus pandemic to drive a new surge in warehousing demand.

Warehouse developers now helping some retail and logistics customers secure additional storage space as lockdowns trigger an upheaval in consumer buying patterns believe the rapid adjustments will give way to longer-term changes in how companies manage their supply chains.

That will likely include more robust e-commerce operations and more “safety stock” positioned around the country as businesses soften their lean-inventory strategies.

“There’s this move away from just-in-time [inventory], so the tenants are getting fatter,” said Kevin McGowan, president of Allentown, Pa.-based McGowan Corporate Real Estate Advisors, which specializes in industrial real estate.

The market to store and position goods for distribution remains volatile, with business shutdowns curbing activity among some operators while others scramble for additional warehouse capacity.

Flexe Inc., which connects businesses to warehouses with space to share, is seeing a rush of demand from retailers and direct-to-consumer brands swamped by online orders for products like cleaning supplies, said Karl Siebrecht, the company’s chief executive.

Merchants that have shut down bricks-and-mortar operations are also looking for overflow storage, Mr. Siebrecht said, as consumer demand for other goods dries up. “There’s a lot of inventory that made its way across the ocean and needs a place to go…a steady flow of shoes and apparel and purses and ottomans.”

The upheaval comes as supply chains across the retail sector have strained under shortages of basic consumer goods during the pandemic. A rush by consumers to stockpile essentials like toilet paper and hand sanitizer has come as coronavirus restrictions have disrupted the flow of goods.

The restrictions aimed at slowing the spread of the novel coronavirus are wreaking havoc on the economy, and could dent the once-hot market for industrial space. But industry executives say consumer habits formed during this period will likely stick and lead to growing demand as companies reset their distribution strategies.

Demand could be particularly strong for temperature-controlled warehouse space to store food if consumers keep ordering groceries online, a market that has been booming as more people stay at home under social-distancing guidelines and have food delivered.

Over the next five years an additional 75 million to 100 million square feet of industrial freezer and cooler space will be needed to meet demand generated by online grocery sales, according to real-estate firm CBRE Group Inc.

While e-commerce now accounts for about 3% of total U.S. grocery sales, “there are huge growth prospects” as housebound shoppers get used to ordering produce, meat and other perishables online, said Matthew Walaszek, CBRE’s associate director of industrial and logistics research.

More than half of 1,000 U.S. consumers surveyed last month said they bought groceries online because of Covid-19, according to a poll by U.S.-Israeli warehouse automation provider Get Fabric Ltd., which does business as Fabric. One in five respondents said they did so for the first time.

Walmart Inc. generated nearly $900 million in online grocery sales last month, up 21% compared with February and nearly double the level of March 2019, according to data provider 1010data, which tracks credit- and debit-card sales.

Industrial property landlord Prologis Inc. expects the overall market for warehouse property to weaken as the economy weathers a coronavirus-driven recession, but the company says e-commerce growth in grocery and other categories should boost demand in the long run.

“There are a wider range of consumers shopping online, and a wider range of products for which they’re shopping,” said Chris Caton, Prologis’s head of global strategy and analytics. “We found a majority of our customers are going to be stable or even grow.”

Updated: 4-15-2020

The World Needs Warehouses Now, And Blackstone’s Got Them

Before the coronavirus crisis, private equity made a big bet on logistics facilities.

As stores from California to New York shut to slow the spread of the novel coronavirus, Amazon.com Inc.’s massive fulfillment centers are a hive of activity. Demand for household staples has been so frenzied that the e-commerce giant is temporarily limiting shipments of nonessential items to its facilities. It also wants to hire 100,000 workers to improve operations—at a time when millions of people in other industries are likely to lose their jobs. The moves have underscored the value of a type of building that real estate investors were already snapping up: warehouses.

Last year, Blackstone Group Inc. bought more than $25 billion worth of industrial properties, which include warehouses and logistics facilities, according to Real Capital Analytics. The private equity firm now owns more of this space in the U.S. than any group except real estate investment trust Prologis Inc., which has also been getting bigger through acquisitions. The two companies have about a billion square feet between them, more than their next 10 largest competitors combined, according to CBRE Group Inc.

In a world where online sellers are poised to accelerate their gain in market share, some see Blackstone, Prologis and other landlords benefiting from one of the few bright spots in a bleak investing landscape. “There’s no doubt that growing e-commerce sales is a secular tailwind that will persist no matter the economic environment, especially now that it’s impossible to buy something in a physical store,” says Eric Frankel, a senior analyst at Green Street Advisors. “That’s the main bullish thesis of why industrial is going to be OK.” But the depth of the recession the U.S. is facing puts investments in even the most essential businesses under a cloud.

Well before the coronavirus, real estate investors were drawn to the fundamentals of warehouses—and were paying high prices for them. The supply of space close to cities that’s needed for last-mile delivery was particularly tight, and vacancy rates across the industry have hovered below 5%. That’s allowed landlords to pass along regular rent increases to tenants, helping to boost the value of these properties by 34% in the three years that ended Feb. 29, according to Green Street.

Even with robust demand from the likes of Amazon, those valuations are now in question. The need for warehouses closely tracks economic activity. (To underscore the point, Prologis has boasted that 2.5% of global gross domestic product passes through its distribution centers.) A worldwide slowdown will remove some, if not all, of landlords’ pricing power. Net operating income for the sector dipped during the previous recession.

“It’s still essentially the safest commercial property type to invest in”

E-commerce is also only a fraction of warehouse demand. Much of the space is used by industries that are going to struggle through the downturn—from auto manufacturing to the oil and gas sector. While the need for space will probably hold up better than in the last recession, “there are things you just don’t think about that are going to be impacted,” says Frankel.

Already, some tenants have started to ask to delay rent payments because of the pandemic, says Jeff Cannon, an executive managing director in Southern California for real estate brokerage Savills. But the economic fallout hasn’t yet translated to lower lease rates for his clients, he says. “The disconnect is that the tenant wants relief, but the marketplace is still tight as a drum in terms of supply.”

So far, investors have shown less concern about debt underpinning industrial real estate than they have for, say, loans on retail space. Prologis and most of the other publicly traded REITs that own warehouses aren’t too leveraged, which should allow them to get through a rough period, according to Frankel. “It’s still essentially the safest commercial property type to invest in,” says James Breeze, CBRE’s global head of industrial and logistics research.

A drop in warehouse values may even entice some players to further consolidate the industry, says Lindsay Dutch, an analyst at Bloomberg Intelligence. “Prologis just bought two companies, one of which was pretty big, so I think they might need a bit of a time gap before they took on something else,” she adds. Blackstone, however, “definitely would have the flexibility.” Prologis declined to comment on potential acquisitions. A Blackstone spokeswoman says that industrial real estate remains its highest-conviction investment theme.

For the landlords that make it through the coming economic doom, there could be even greater spoils. Past shocks to supply chains, like the earthquake and tsunami that battered Japan in 2011, convinced many companies that they should keep more inventory on hand to avoid running out of key parts, says Chris Caton, senior vice president of global strategy and analytics at Prologis. “That is going to be a defining characteristic of the industry over the coming years,” he says. More inventory, of course, means more demand for a place to put it.

Demand For Cold Storage To Grow By 100M SF In 5 Years, But Small Users May Be Frozen Out

Once a niche play in the industrial sector, cold-storage warehouse space is on a growth track. The habits of U.S. consumers, who will order more food online in the coming years, is spurring the growth.

A recent report by CBRE estimates there will be demand for as much as 100M SF of new cold-storage space over the next five years. That is a nearly 50% increase over its current market size of about 214M SF, since much of the food ordered online needs refrigeration at some point in the delivery cycle.

As the sector grows, that might mean less cold storage space available for smaller food companies, Bloomberg reports. That is because ownership in the sector is consolidating, and the economics of cold-storage space, which is expensive to build and operate compared to standard warehouse space, favors larger users.

Two companies, Americold Realty Trust and Lineage Logistics, have acquired about 60% of the sector in North America, expanding through recent acquisitions.

Earlier this year, for instance, Americold bought Chiller Holdco, also known as Cloverleaf Cold Storage, for $1.24B. Americold was already the No. 1 owner of cold-storage space when that deal happened, and now owns about 887M SF. Lineage owns about 778M SF.

While Americold works with many smaller companies, its top 25 customers account for 59% of revenue, CEO Fred Boehler told Bloomberg.

Another factor squeezing smaller users of cold-storage space is that despite demand, new supply can be developed only so fast, and most of those developments are build-to-suit for major users. Due to the high cost of development, spec cold storage buildings aren’t being built, NKF Senior Managing Director Corey Chase said.

So there will be a persistent shortage of cold-storage space. Even so, the Food Marketing Institute and Nielsen predict that groceries ordered online will account for 13% of total grocery sales by 2022, up from 3% in 2018, or an additional $100B in annual grocery sales online. “Few sectors of commercial real estate will undergo as much transformation in the coming years as the cold-storage industry, due to e-commerce’s impact on this previously underpenetrated market,” CBRE Associate Director of Industrial & Logistics Research, Americas Matthew Walaszek said in a statement.

“We will see robust demand, further innovation in delivery and automation, and possibly more consolidation among major players,” Walaszek said. Much of the cold-storage sector’s growth is likely to occur in gateway markets like Los Angeles and the New York area, as well as leading food-production states, such as California, Washington state, Florida, Texas and Wisconsin, CBRE reports.

Updated: 6-26-2021

Warehouse Rents Surge On Bidding Wars For Scarce Space

Negotiated prices rose faster than asking rents in the first five months of the year in a rush to fill e-commerce demand, says CBRE.

The U.S. warehouse market is starting to look like the red-hot housing sector, as companies jockey for scarce distribution space to meet surging e-commerce demand.

The competition is driving up industrial rents as retailers and logistics providers race to move goods closer to population centers, with some engaging in bidding wars for the most coveted sites. Businesses are pushing to deliver online orders faster to the homes of digital shoppers and responding to growing consumer spending that is helping drive an economic rebound.

Demand for industrial real estate is so strong that taking rents—the initial base rent agreed on by a landlord and tenant—are rising faster than asking rents, according to real-estate firm CBRE Group Inc. Industrial taking rents were up 9.7% in the first five months of 2021 compared with the same period last year, while industrial asking rents rose 7.1%, according to CBRE, which tracks 58 U.S. markets.

Prices are rising at a particularly strong rate for logistics space near ports and cities, and for big-box warehouses such as those used in large online fulfillment operations.

First-year base rents in Northern New Jersey jumped by a third year-over-year through May, while those in Southern California’s Inland Empire rose 24.1%, according to CBRE. Taking rents for bulk warehouse space of 500,000 or more square feet increased 13.2% from the same period in 2020.

“It’s creating a situation similar to the housing market, where there’s limited supply and multiple bidders,” said James Breeze, senior director and global head of industrial and logistics research for CBRE. “There’s just a few viable options and occupiers really want those options, and they’re willing to pay more for them because they’re so strategically important.”

The pandemic and lockdowns that shuttered many storefronts and kept people at home supercharged online sales, pushing retailers to speed up investments in digital shopping capabilities.

E-commerce will account for 26% of all U.S. retail sales by 2025, up from an estimated 20% in 2020, according to CBRE forecasts based on 2020 e-commerce activity data from market researcher Euromonitor International, putting further strain on warehouse supply and generating demand for another 330 million square feet of distribution space.

Logistics providers, retailers and wholesalers that supply those merchants are adding more warehouses to serve as regional hubs, Mr. Breeze said, to deliver goods faster and cut transportation costs. Companies are also looking to keep more inventory on hand to guard against shortages.

“It’s e-commerce, it’s inventory control and general demand from the public on an improving economy,” he said.

The amount of available industrial land for new warehouses near urban centers has declined over the past decade, according to a June research report from Prologis Inc., the largest owner and manager of logistics real estate by square footage.

That’s adding to the pressure on the supply of warehouses, especially for larger buildings with higher ceilings and ample parking to accommodate labor-intensive e-commerce fulfillment, and pushing more development out to the secondary markets.

Teaneck, N.J.-based real-estate firm Treetop Cos. has been scoping out large parcels of land for warehouses an hour or so north of New York City since 2019, in upstate towns like Middletown and Fishkill, N.Y., with easy access to highways.

“In every area where we locked up land, now people are fighting to get into those areas, Amazon included,” said Treetop co-founder and managing member Azi Mandel. “For people to get their toilet paper the next day…you need more warehousing space.”

Updated: 6-29-2021

Warehouse Operators Turn To Wearable Technology To Solve Workplace Strains

U.S. supply-chain arm of grocery store owner Ahold Delhaize is bringing ‘exosuits’ to its increasingly busy distribution centers.

Your next load of groceries may be moved by a modern-day bionic man or woman.

The U.S. supply-chain arm of supermarket-owner Koninklijke Ahold Delhaize NV is expanding its use of a newer type of wearable robotic technology that workers strap on to help ease the strain of lifting heavy boxes all day.

The devices known as exosuits are a tech-filled step beyond the back belts that blue-collar workers often wear, laced with sensors and algorithms that detect how workers move and help them lift and load as they work though warehouses.

The devices are the latest entry in a distribution sector wrestling with concerns over worker safety and health in warehouse operations that have boomed over the past year as consumers under pandemic lockdowns have turned to ordering goods online.

Amazon.com Inc. has stepped up injury-prevention programs amid criticism of working conditions in its big fulfillment centers and warehouse operators are testing other technology aimed at reducing injuries from repetitive tasks.

Companies have turned to more use of robots in warehousing operations but many tasks requiring fine-motor skills still must be performed by people.

Cambridge, Mass.-based Verve Motion says its battery-powered devices can reduce 30% to 40% of the strain from lifting, helping relieve workers’ backs without restricting their movements.

The company has been working with Netherlands-based Ahold Delhaize’s ADUSA Supply Chain network, which supports U.S. brands including Food Lion and Stop & Shop and began testing the lightweight devices last year. The business plans to expand the pilot to include more than 250 exosuits over the next few months at multiple locations, ADUSA Supply Chain said Tuesday.

The company started testing the devices at two sites last year, with a goal of reducing worker fatigue and soft tissue injuries. Chris Lewis, president of ADUSA Supply Chain, said that could also help retain employees in a tight labor market.

“Having it be more compelling for people to want to work for us” was “very much on top of our minds,” Mr. Lewis said.

The pilot focused on workers known as selectors who assemble orders for retail stores and e-commerce fulfillment centers. The selectors drive forklifts around warehouses, pulling down cases of goods and adding them to pallets for 8 to 10 hours a day.

The company tested the exosuits, which strap on like a backpack and weigh 4 to 5 pounds, on both male and female workers and those with a range of ages and body types.

The device doesn’t boost how much weight people can lift, Mr. Lewis said, “it just reduces the strain you feel when you’re picking it up.”

Workplace safety experts say such technologies are promising, but aren’t a substitute for other methods of reducing injuries, such as regular ergonomic training or limiting the time workers spend on strenuous tasks. Wearable devices such as exosuits also should be monitored over time to determine long-term safety and effectiveness.

“They need to be used in an intelligent way,” said Dr. Martin Cohen, an industrial hygienist and teaching professor at the University of Washington’s department of environmental and occupational health sciences.

“You need to be aware of any repercussions or unintended consequences of using” such devices, including whether they change how a person’s muscles react in certain movements, he said.

ADUSA Supply Chain’s safety and ergonomics teams were closely involved in the pilot, which didn’t involve medical personnel, a spokeswoman said. The company does ergonomic training and support for distribution workers, she said, regardless of whether they are wearing exosuits.

Verve Motion Chief Executive Ignacio Galiana said the company, whose legal name is Verve Inc., is focused on the supply chain and logistics market, but declined to name other customers. “There are millions of workers doing manual material handling jobs in the U.S.” he said. “That’s a huge market.”

Real-Estate Firms Expect Coronavirus-Driven,Real-Estate Firms Expect Coronavirus-Driven,Real-Estate Firms Expect Coronavirus-Driven,Real-Estate Firms Expect Coronavirus-Driven,Real-Estate Firms Expect Coronavirus-Driven,Real-Estate Firms Expect Coronavirus-Driven,Real-Estate Firms Expect Coronavirus-Driven,Real-Estate Firms Expect Coronavirus-Driven,Real-Estate Firms Expect Coronavirus-Driven,Real-Estate Firms Expect Coronavirus-Driven,Real-Estate Firms Expect Coronavirus-Driven,Real-Estate Firms Expect Coronavirus-Driven,Real-Estate Firms Expect Coronavirus-Driven,Real-Estate Firms Expect Coronavirus-Driven,

Go back

Leave a Reply