Colliers Industrial’s recent National Industrial Conference was a resounding success, attracting almost 700 attendees to Scottsdale. This gathering provided an invaluable platform for industry leaders, experts, and professionals to share their insights, discuss emerging trends, and gain a deeper understanding of the market’s dynamics. Featuring a stellar lineup of speakers and captivating panel discussions, the event unveiled standout data discoveries, common themes, and more in the industrial real estate landscape.
Population Migration and Industrial Real Estate
The L&T Pre-Conference kicked off with a thought-provoking presentation by KC Conway of Red Shoe Economics, who emphasized the importance of tracking population migration patterns in the context of industrial real estate. As people relocate, it has a direct impact on demand for industrial spaces in specific regions. Conway also highlighted that household debt has emerged as a significant economic challenge, warranting attention from industry stakeholders.
Furthermore, Conway noted that ecommerce companies are displaying a growing inclination towards occupying smaller footprints, reflecting a shift towards risk-averse strategies. Despite these changes, our ports remain strong, serving as vital hubs in the global supply chain.
Operational Efficiency in Focus
During the occupier panel discussion, panelists Betsy Power of PepsiCo, Natalie Tyler-Martin of Veritiv and Paola Echeverri of W.W. Grainger shared their commitment to improving operational efficiency. They likened their approach to the popular HGTV show “Love It or List It,” emphasizing the importance of either optimizing existing spaces or disposing of assets that no longer align with their strategic objectives.
Additionally, they stressed the critical need for ongoing communication with senior leadership about market conditions, given the current high rates. Effective communication is essential for navigating the deal flow process and making timely decisions.
Some occupiers are exploring the option of building their own facilities, but they face challenges related to the availability and cost of land. Site selection plays a crucial role in this process, with the entire distribution network taken into consideration.
Notably, occupiers who own their real estate are capitalizing on the market by selling older buildings to fund the construction of new, more efficient facilities. The focus is also on value-engineering tenant buildouts to maintain competitive lease rates and cost structures. Data analysis has become paramount, with one panelist discussing the use of software to aggregate data on labor, demographics, transportation, and access.
Ultimately, they shared that an occupiers’ primary goal is to find innovative ways to reduce costs, whether through negotiating lower rates or securing tenant improvement allowances for essential upgrades.
Economic Insights from Dr. Marci Rossell
Dr. Marci Rossell, a prominent economist, delivered a compelling keynote presentation on the current economic landscape. Despite the Federal Reserve raising interest rates, the economy has not experienced a “hard landing.” This is largely because a recession typically requires a decrease in economic activity, and current GDP numbers remain robust, hovering above 4.5%.
Dr. Rossell highlighted that unforeseen “surprises” in the economy can trigger recessions, and unemployment rates vary across age groups, with younger individuals facing higher levels of unemployment. She also noted the challenges associated with a smaller Gen Z workforce and the resulting shortage of skilled labor.
The tech sector’s impact on jobs, particularly in response to rising interest rates, was discussed. She identified AI as a potential solution to fill the skilled labor gap, with the technology progressively assisting or replacing labor in various industries. Small and medium-sized businesses were identified as having the most to gain from adopting AI solutions.