Here are some thoughts per the keynote speaker:
1. On-line retail sales were 19.5% in 2021. They are projected to be 32% in 2032. Thus, the need for merchandise storage will continue.
2. Transportation costs continue to cause concerns for businesses.
3. “Just in case” inventory storage capacities will go from a 45 day supply to a 30 day supply.
4. The national vacancy rate for industrial product is 2.9%. Many markets have very old buildings that need expensive repairs. The average building age in Phoenix is 33 years old.
5. The average national Industrial lease is for 5 years with 3% annual bumps.
6. Rising construction costs were an on-going theme.
From other speakers:
1. Big concerns for new industrial buildings are higher ceilings (Amazon’s new fulfillment centers are 100 feet tall), power supplies, truck courts, sustainability re solar panels or recapturing energy. Strictly outdoor storage has become very big and is also expensive per acre to lease.
2. Phoenix is in the top 5 industrial markets nationally (especially for manufacturing!) because of their labor supply and power availability.
3. There are over 33 million square feet of industrial square feet in Phoenix right now.
4. Many developers are backing away from existing deals so it’s predicted that in 2024 that there will be a significant shortage of industrial buildings to lease.
5. Labor and skills shortage are the #1 concern of many companies.
6. Buyers and sellers are likely to hold off until January to make decisions.
7. Cities and counties will start selling off unused properties.
8. Regarding interest rates, it will take 6 to 9 months to stabilize. There will be a period of confusion until 3rd Qtr of 2023.
9. The #1 problem with e-commerce is labor. They want taller buildings (40′ clear heights) for buildings 500,000 sf+.
10. Many industrial tenants want their buildings to mock their retail stores fronts. Dick’s Sporting Goods is a good example.
11. There will continue to be “last mile buildings” that are located in in-fill locations that are close to labor AND consumers.
Our team at ICRE Investing is well versed in the Phoenix market and has connections across the valley. Whether you are looking for new efficient office space to lease or are hoping to find a sustainable investment for the future, we’ve got you covered. Feel free to contact us any time!