Industrial Real Estate Pros Are The New ‘Cool Kids’ And See Booming Job Market
For Pete Quinn, the national director of industrial services for Colliers, there simply aren’t enough hours in the day. His very, very busy team needs more help; they hired 47 people last year, and they will hire at least that many in 2021.
“We’re setting records,” Quinn said. “I’ve told my brokers many times during national calls that I’ve been in industrial real estate for 30 years, and it’s the first time I feel I’m with the cool kids.”
Between tailwinds in the economy caused by the consistent growth of e-commerce and just-in-time delivery, and the demand shock produced by the coronavirus pandemic, industrial real estate has been booming. CBRE Senior Research Director, Industrial & Logistics James Breeze said the past six months have been “crazy,” the busiest six months on record between sky-high rental rate growth, construction expansion and pre-leasing. He predicts this year will break the record for overall net absorption. And that demand will transfer right over to the job market.
With demand for real estate professionals growing alongside the voracious appetite for warehouse space, managers and headhunters said that experienced staff is in high demand.
“Their value as candidates has never been higher,” CRE Recruiting founder and principal Allison Weiss said. “I think anytime you’re in a real hot market for a particular sector, the highest demand is for those who get the deals done."
Managers said in addition to hiring more and more data analysts, needed to help understand and plan increasingly complex logistics networks, they’re looking for broker candidates who have problem-solving skills and an understanding of the industry’s unique issues and terminology.
Franz Colloredo-Mansfeld, chairman and CEO at Cabot and an Urban Land Institute member, said his firm, which has been in the business for decades, and many other traditional industrial firms, are hiring entry-level gigs and willing to train, a much easier proposition now that the industry is getting more attention. He’s also noticing more firms focusing on diversity, and through new hiring, creating more diverse workforces.
Gregg Healy, executive vice president and leader of North American industrial and logistics services at Savills, said it’s important for candidates to understand the job is often about solving supply chain and strategy solutions through real estate, especially those involving transportation and workforce. An understanding of “defensible data” when it comes to arguing for certain sites is key.
“The real estate professionals we need are people who understand transportation,” he said. “Half of the cost of delivery is transportation, and half of that is last-mile. Thinking more comprehensively from a tenant perspective is really critical. It’s not as much about the box as it is the drivers who find the box.”
There’s also demand for professionals who understand the increasingly high-tech logistics industry, which is investing heavily in automation and robotics. Weiss said many of the biggest players are recruiting new talent out of undergrad, looking for a younger generation to breed more innovation within the field.
Much of the continued spike in warehouse activity comes from the pandemic boom, Colorado State University assistant professor of Supply Chain Management Zac Rogers said. E-commerce shot up 45% last year, instead of the predicted 15%, and since supply chains for stores and online merchants are lean by design, there wasn’t a lot of slack in the system.
“There was never a slow period or a break,” Rogers said. “We haven’t expanded the amount of available space in like 12 or 14 months. That’s not to say we haven’t built warehouses, of course, we just haven’t kept up with demand.”
That’s led to a situation where the industry needs more warehouse space than it’s ever had, and due to the rising land and construction costs, and need for additional last-mile delivery space in more expensive urban locations, it’ll be more expensive than it’s ever been. The supply chain is evolving, and the persistent delays, transportation issues, and lockdowns of the last 15 months have led many retailers and manufacturers to seek more space to store safety stock domestically.
“You can’t make a bad bet spending that much money,” Rogers said. “It’s high stakes.”
Between inflation hitting the cost of lumber and construction materials, and historic highs in rents, the biggest challenge is finding the right space, Quinn said. But that demand is making it a good time to be in industrial real estate.
Emerging sectors of CRE always invite brokers and talent with backgrounds in different fields to consider making a switch. In the case of industrial, the similarities with retail — increasingly a field obsessed with logistics, omnichannel delivery and last-mile service — make it slightly easier for those in the struggling sector to make the switch. Savills’ Healy said while industrial is a different animal, and the demographics and demand drivers are different, it’s not impossible for retail professionals to learn on the job.
While industrial property is in high demand across the board — “It’s getting to the point where’s there’s not really something like a secondary market anymore,” CBRE’s Breeze said — there are growth markets with outsized opportunity. Breeze targets Phoenix, Reno, Texas and Las Vegas, as well as coastal Carolina and Florida, as areas with the strongest population growth.
But even the most established markets, such as New York City and the Tri-State area, continue to see growth, with developers and clients seeking out new space in converted or renovated space (golf courses, former malls, and industrial and manufacturing sites) and even multi-story warehouses. Rising prices and rents have catalyzed more creative approaches. The business is on the cusp of transformational change, which includes more resilience in the form of longer-term storage and near-shoring of inventory, Healy said.
“[The industry] is quite dynamic,” he said. “Even with things moving fast now, they’ll only move faster.”