Logistics Hiring Spikes As Industrial Sector Gains
The transportation and warehousing industries added about 99,000 workers in June, according to the Bureau of Labor Statistics, pointing to a revitalized industrial real estate sector in the wake of pandemic-related slowdowns.
In particular, employment in warehouses was up by 61,000 jobs for the month, with other categories (couriers, truck drivers and support positions) adding the balance. During April and May combined, the BLS reported, the transportation and warehousing sector lost 588,000 jobs.
The recent upsurge in e-commerce helped drive the employment gains, as more people are ordering more goods online than before. The Census Bureau reports that e-commerce retail sales were up 2.4% during the first quarter of this year compared to the fourth quarter of 2019, while retail sales as a whole were down 1.3% over the same period, which included only the beginning of the pandemic.
Also, businesses are restocking.
"A good bit of [the hiring] is due to your manufacturing reopening, businesses reopening and just the need for inventory replenishment,” Logistics Trends & Insights President Cathy Roberson told the Wall Street Journal.
Logistics specialists are seeing holiday levels of activity, at least in terms of deliveries to residential addresses. FedEx reported recently that 72% of its U.S. shipments went to residences in Q1 compared with 56% during the same quarter in 2019.
There also seems to be a measure of overall optimism in the industrial real estate market. In its most recent Snapshot Sentiment Survey, released in late June, the Society of Industrial and Office Realtors found that industrial brokers were more optimistic than office brokers, scoring 6.82 on a 10-point scale for industrial and 6.24 for office.
Industrial brokers in the Northwest and Southwest enjoyed the most confidence, with those in the Central U.S. feeling the least confidence, the report noted.
Moreover, industrial real estate brokers reported in June that 41% of their transactions were on schedule compared with 31.1% in May, and deals on hold dropped from 28.8% in May to 21% in June. Outright canceled deals in May totaled 17.7% but dropped to 16.3% in June.
Industrial developments are also breaking ground. For example, Bridge Development Partners broke ground on a 534K SF logistics building in East Oakland in late June.
"It’s hard to be more bullish than we are on this particular project, in terms of the initial response from the market," CBRE Senior Vice President Kevin Hatcher told Bisnow.
In Maryland, Amazon is planning at least two new warehouses in the D.C. suburbs, with each one totaling as much as 200K SF. The online retailer hired 175,000 employees in April to keep up with the new demand for online orders.