Industrial Real Estate Trends To Watch In 2023

February 1, 2023
3PL, e-commerce, Industrial Real Estate, Supplychain,

Despite the economic hardships faced by many industries in 2022, the industrial sector retained its status as one of the strongest commercial real estate performers. New challenges await in 2023–alongside massive opportunities for growth: With deliveries anticipated to remain at an all-time high, industrial asset are expected to be among the top performers in the commercial real estate sector. We’re here to help you navigate some of the industrial real estate trends that can help your business thrive in the year ahead. 

Supply Chain Resiliency

In response to the combined pressures of the pandemic on the global supply chain, 2022 saw a shift towards North American production and supply chain diversification. The “China Plus One Strategy” has had a major impact on both the US and Mexico as companies work to protect their inventories, both through warehousing raw materials and manufacturing goods domestically. 

As industry after industry bypasses offshoring/importing goods, an ever-growing number of organizations are in need of space across all levels of the supply chain. This is especially true of the tech industry in the US, which has been spurred by considerable government funding to focus on domestic production. 

Whatever your industry, the supply chain is a critical aspect of your strategy. Be sure to take into account the movements of both your local and global suppliers and distributors as you plan for 2023. 

The E-Commerce Effect

Driven in large part by younger consumers, e-commerce will likely serve as a guiding force for the logistics industry for the next decade. This means that industrial warehouses and distribution centers will continue to be in high demand for the foreseeable future. The industry has already seen record delivery of new warehouse properties to accommodate tenants, both in existing and emergent strategic epicenters. 

The growth of e-commerce must be balanced against the shifts in the global supply chain, which means optimizing your organization’s location is of key importance in 2023. The South Bay region is prime real estate, as it features a growing population and premier distribution access. Our experts can help you find a modern facility that suits your needs, letting you ride the e-commerce tide for years to come. 

Strategic Location

To accommodate the pressures of collapsed delivery times, a strategic location is critical to ensure the connection of target markets to the global supply chain. Coastal cities with proximity to US entry ports will see an increased demand for distribution resources as the supply chain continues to evolve—which means an increased demand for nearby industrial space at seaports as well as along direct transportation routes to/from Mexico. 

Location will be especially critical in 2023, both to optimize the cost and efficiency of the supply chain and to combat high fuel costs, labor shortages, and increased rent costs. Tenants will be looking for properties near strategic hubs that offer reliable infrastructures, competitive rental rates, and strong labor pools—which means Southern California will be especially attractive. Whether you’re looking for your next facility or need help putting your property on the market, our team can help you get ahead. 

3PLs to Lead the Pack

To keep up with the intensity of consumer expectations, 3PLs will outsource at a significantly increased pace to combat the challenges of strained inventories, transportation costs, and labor shortages. As a result, 3PLs will lead the demand for leasing activity in the industrial sector. With an anticipated market share of 40% by mid-2023, 3PLs will create a trend of solid leases that keeps vacancy rates low. 

With increased demand for strategically located warehouse properties that offer Class A design features, the South Bay will grow more and more competitive. Finding a high-quality property or negotiating favorable lease terms will require expert guidance.