Industrial Insights - March 2023
NAIOP I.CON 2023 Key Takeaways
NAIOP convened industry leaders to discuss trends shaping industrial real estate. Key discussion points included:
Economic Outlook and Labor Market
The workforce is slowing, requiring technology innovations to maintain productivity levels. Rebecca Rockey, economist at Cushman & Wakefield, noted that "GDP is a function of labor, capital, and productivity."
Market Cooling
Industrial absorption is declining, though demand remains solid. Banks have become more defensive, reducing transaction activity while regional banks increase deposit requirements.
Supply Chain Reshaping
COVID-19 catalyzed a shift toward nearshoring and "friend shore" arrangements, moving away from purely global sourcing models to regional approaches favoring allied nations.
Labor Market Advantages
The Inland Empire offers unmatched logistics labor concentration, with 400% worker growth over five years. This makes it highly attractive for warehouse and material handling operations.
Multi-Story Industrial
High-rise construction requires different building codes, increased costs, and careful tenant requirement analysis for fulfillment centers, maker spaces, and light manufacturing facilities.
Southwest Market Growth
Las Vegas and Phoenix are attracting East Coast companies establishing West Coast distribution hubs, redirecting investment from Southern California.
Mexican Market Challenges
Power access remains critical but problematic, with electricity regulation and infrastructure investment needed to support manufacturing facilities.
Community Integration
Industrial development requires early stakeholder engagement, professional teams, and public relations expertise to coexist peacefully with residential areas.
Sustainability Implementation
California's solar requirements demand early consultant involvement to streamline implementation and reduce costs for new industrial buildings.
Advanced Manufacturing
Facilities prioritize flexibility, scalability, and quick operational startup capabilities.
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Lease Comps - Q1 2023
Top industrial leases ranged from $1.49 to $2.45 per square foot annually across Los Angeles, Orange County, and Inland Empire markets, with annual increases between 3.5% and 4.75%.
Market reports available for all three regions.
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Media & Podcast
Two books published on industrial real estate investment and operations. Multiple podcast episodes feature industry experts discussing warehouse automation, credit underwriting, and 2023 legislation.