34th Annual Survey of Corporate Executives Commentary: Survey Results Reveal Challenges In Today’s Industrial Market
This year’s Corporate Survey results echo the continued strong demand we are seeing in the U.S. industrial sector, as well as the continuing “war for talent.”
Almost half of the respondents (45 percent) are seriously contemplating opening a new facility in the near future, with a whopping 87 percent of those to be located domestically. Of those new facilities, 62 percent are slated to be manufacturing or distribution. This echoes the continued strong demand we are seeing in the industrial sector in the United States.
Since 2013, industrial space demand has outpaced new developer completions by more than 89 million square feet. In that same time period, rents have increased by 25.2 percent, according to CBRE Research. CBRE tracks a basket of 14 strategic industrial markets in the United States. Seven of those 14 markets (Detroit, Las Vegas, Salt Lake City, Milwaukee, Reno, St. Louis, and El Paso) had vacancy rates below or slightly above the national average (4.3 percent) and aggregate net asking rent growth of 6.1 percent year-over-year. Overall, these markets have large industrial labor pools at relatively low cost. With industrial demand continuing to increase, current available space and new completions should be fully absorbed. E-commerce, third-party logistics, manufacturing, and food and beverage users, which have fueled much of the demand in recent years, remain the most likely candidates to occupy new buildings.
Digging deeper into the survey reveals some of the current challenges in today’s industrial market. Attend any industrial site selection or real estate event and you will no doubt hear concerns about “the war for talent.” According to the survey, the No. 1 challenge on the minds of respondents is the availability of skilled labor (65 percent rate this as “very important,” the highest such rating). Skilled industrial labor is harder and harder to find in today’s market. For some the answer has been automation, but that has a high barrier to entry, often with capital investment in the tens of millions of dollars and significant implementation risk. For those who cannot or will not choose automation, the solutions to the labor challenges have been higher wages, better benefit packages, and better workforce development programs. This trade-off is something to watch closely in 2020.
Supply Chain Bottlenecks Creating New “Logistical Hotspots”
2020 Top States for Doing Business Showcase Their Pro-Business Environments
2021 Gold & Silver Shovel Awards Recognize State and Local Economic Development Efforts
35th Annual Corporate Survey: Effects of Global Pandemic Reflected in Executives’ Site and Facility Plans
Auto Industry Is Betting on Sustainability
2021 Auto/Aero Site Guide
Latest Trends in the Industrial Real Estate Sector Here to Stay