How North America’s Shifting Demographics Are Changing Industrial Real Estate Trends
As shipping and logistics companies accommodate increased consumer demand, industrial market trends continue to be governed by a force often hidden behind massive cargo ships and multimodal distribution centers: aging workers and urbanization.
Walter Kemmsies, JLL U.S. Ports, Airports and Global Infrastructure Group’s managing director, economist and chief strategist, sees continued low vacancy rates, new construction and climbing lease rates as signs of being in a mid-cycle moving toward the peak. Population shifts are a major cause.
Demographic shifts to dense urban centers, coupled with the rise of e-commerce, have created congestion on major roadways and shipping delays. To meet demand for same- or next-day delivery, vacant properties like offices and even parking centers have been converted into local distribution facilities.
“The U.S. is actually behind the curve on this front,” Kemmsies said. “Europe has been repurposing real estate that way for the better part of the last 20 years.”
The population is not only growing, but also aging. This has had an impact on the shipping and logistics workforce. As Baby Boomers age, labor shortages are happening on a national level.
Driver Solutions predicts a deficit of 50,000 drivers in 2017 as more retire and few Millennials take their place.
Baby Boomers span an age range of 15 years. While those closer to 65 are able to reap retirement benefits, when the last of the generation reaches age 65 in 2026, that may no longer be a possibility.
“You might find that the back end of the Baby Boomer curve, those guys will be more willing to work, or have to work, at a much later age than the front end of the curve,” Kemmsies said.
Automation offers a solution. In Japan, warehouses owned by Daifuku Co. Ltd. have incorporated multiple robotic storage and retrieval systems and sophisticated light-directed picking and goods-to-person conveyors and sortation systems, Supply Chain Quarterly reports. The modernization comes as Japan’s population continues to age, and industrial labor is taken up by employees well into retirement age.
At ports, an increase in cranes allows for more 24/7 productivity than is sustainable by human workers.
“Some of these cranes can lift four boxes, each weighing 15 tons on average, so 60 tons," Kemmsies said.
The high speeds and heavy weights create a dangerous situation for human workers, so automation acts more as a replacement than a supplement to the current workforce.
On the roads between seaports and inland hubs, technological innovations in trucking practices are working in tandem with human drivers.
Autonomous driving has emerged as a way to optimize delivery time while maintaining safe working conditions. Startups like Starsky Robotics have created systems that can take over steering, acceleration and braking once a truck is on an open highway, the Financial Times reports.
Truck drivers can only work for a certain number of hours before taking a break. But time spent behind the wheel, even if the vehicle is in motion, does not add to their total service. Combined with autonomous technology, companies could get more miles per trip over a 24-hour to 48-hour period.
“Given that there is a shortage of truck drivers, there is a pressing economic need,” Kemmsies said.
It is the collaboration between a human workforce and robotic assistance that signals the future of shipping and logistics. The industrial sector, for now, will remain human-centric.
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