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Five Factors Driving U.S. Industrial Real Estate Market's Resurgence

3). Global supply chain trends Growing labor costs in Asia, particularly China, coupled with volatile fuel costs, have forced companies to re-evaluate their supply chain networks.  "The U.S. is a huge consumer market. All things being equal, companies will want to be in close proximity to their customers as it improves speed-to-market, reduces inventory carrying and freight costs as well as reduces risks and improves customer service," said Thompson.  "These critical supply chain considerations make the U.S. increasingly more attractive from a manufacturing or sourcing perspective. Companies are diversifying their manufacturing and sourcing decisions just as an investor would their personal investment portfolio. Having a physical presence in the U.S. is becoming increasingly important."

4). The explosion of E-commerce in the U.S. and globally The primary industries leading the demand for warehouse and distribution space are food-and-beverage, e-commerce and traditional retailers.  In fact, one-third of all demand for big-box space is tied to multi-channel retailers or 'e-tailers'. The influx of e-commerce and m-commerce (mobile) has revolutionized the retail sector.  Retailers tapping multiple channels to sell their merchandise are finding it more cost-effective to increase online logistics operations rather than open more traditional stores, requiring an entirely different distribution model. Therefore, retailers are evolving their regional distribution networks to include e-commerce distribution centers. Demand from these companies has been growing since 2009 and will continue to do so. 

"Our focus on distribution hubs such as Southern California and Central Pennsylvania is in a large part driven by the demand in this sector," said Shannon Hondl, Chief Development Officer for Goodman Birtcher.  "Jones Lang LaSalle's expertise in this industry vertical coupled with their ability to underwrite and execute complex and strategic projects has helped put us in a market-leading position as we develop the next generation of distribution centers."

5). Solid U.S. connectivity and infrastructure The U.S. has a world-class supply chain infrastructure (e.g. ports, highways, airports, rail) which is another important factor in attracting and retaining manufacturers. Its proximity to the Panama Canal which is currently undergoing an expansion so that large ships can pass through its waters is another plus for the U.S. The expansion will encourage growth and investment within the broader logistics universe impacting everything from shipping and rail line construction to warehousing and terminal development in the U.S. and around the world.

The Canal expansion is prompting companies in both seaport and inland markets to re-examine their logistics processes and facility positioning. The demand for industrial property around these receiving ports both inland and coastal, is set to rise as U.S. ports  gear up to cater to the next generation of large shipping vessels. Federal funding for necessary dredging and pier-side infrastructure has not been readily available.  This has created opportunity for the private sector to offer new solutions through public-private partnerships (P3's) in order to bring port expansion projects to fruition

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