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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.
Bisnow interviewed Walter Kemmsies, JLL U.S. Ports, Airports and Global Infrastructure Group’s managing director, economist and chief strategist, for insights into major demographic shifts affecting industrial real estate. Kemmsies 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.
Read the full article on Bisnow, and register today for I.CON: Trends and Forecasts, June 8-9 in Long Beach, California, the critical conference for the industrial real estate sector and your opportunity to network and share strategies with top industrial leaders from across North America.