Commercial Property Executive interviewed Duke Realty Chairman and CEO Jim Connor on the state of the industrial real estate industry in the midst of supply chain disruptions due to port bottlenecks, particularly in Los Angeles and Long Beach in California, where containers ships are often waiting weeks to unload their cargo.
In the article, How the Supply Chain Crisis Impacts Industrial Real Estate, Connor discussed the shift from “just-in-time” inventory strategy to a “safety stock” model that ensures there is 30 to 45 days of inventory in a warehouse compared to 14 days. “These companies feel the need to have more critical or core material inventory on board to avoid future supply chain disruptions,” Connor told Commercial Property Executive.
Logistics experts said that trend coupled with the growing move for more onshoring of manufacturing to North America will drive the increasing demand for high-quality industrial warehouse and distribution space across the U.S. for the next five years. The combination of drivers could add from 750 million to more than 1 billion square feet of incremental demand for new warehouse space in the next few years.
“That’s two to three years of normal demand in the U.S. Every headline you read about supply chain issues is a catalyst for more warehouse demand in the U.S.,” said Connor.