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.”
Q1 2020
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.
Project Announcements
New Riff Distilling Plans Silver Grove, Kentucky, Barrel Storage Warehouse
06/24/2022
Kroger Establishes Aurora, Colorado, Fulfillment Center
06/24/2022
Americold Establishes Dunkirk, New York, Distribution Hub
06/24/2022
Dunn Utility Products Plans New Albany, Mississippi, Operations
06/24/2022
Carolina Precision Foods Plans Florence, South Carolina, Processing Plant
06/22/2022
Rockford Spring Plans Lewisburg, Tennessee, Manufacturing Complex
06/20/2022
Most Read
-
Area Development’s 17th Annual Shovel Awards Recognize State and Local Economic Development Efforts — First Two Platinum Shovels Awarded
Q2 2022
-
The 2021 Top States for Doing Business Reflect Their Locational Advantages
Q3 2021
-
36th Annual Corporate Survey: Executives Focus on Labor, Energy, Shipping Costs
Q1 2022
-
The Evolution of the Megasite
Q2 2022
-
Trends in Data Center Site Selection
Q2 2022
-
Rail Gains Advantage Amidst Supply Chain Snarls
Q2 2022
-
Five Ways for Manufacturers to Manage Global Market Volatility
Q2 2022