CHARLOTTE, NC — During the closing panel of France Media’s InterFace I-85 Industrial Corridor conference, brokers from key markets along the 666-mile highway provided updates on developments and opportunities on their territories.
Brockton Hall, vice president of Colliers’ upstate South Carolina office, said the Greenville-Spartanburg industrial market in South Carolina has 16 million square feet of industrial space under construction, which which represents inventory growth of approximately 7.4%.
Graham Stoneburner, senior vice president of Cushman & Wakefield, said the Richmond, Va., market currently has 11 million square feet under construction, representing inventory growth of 11%.
Similarly, Robbie Perkins, shareholder and market president at NAI Piedmont Triad, said the North Carolina Triad area has 8.7 million square feet in the development pipeline, a growth rate of nearly 11%. compared to the market’s 80 million square foot inventory.
During nearly every panel at the conference, held Wednesday, April 13 at the Hilton Uptown Charlotte, brokers, investors and developers described industrial growth along the I-85 Industrial Corridor as “unprecedented.” “.
“There’s a real lack of supply right now, but we have a lot to do,” John Montgomery, general manager of Colliers’ northern South Carolina office, said during the leasing panel, managing and operation of the conference. “This year, four to six specific buildings will be under construction in Cherokee County alone.”
But for all the new million-square-foot distribution centers and huge, state-of-the-art manufacturing plants that will come to the Carolinas, Richmond, Atlanta and Montgomery, Alabama, panelists said there are a question that hovered above everything: where are all the roofs? that are needed to support these new workers?
“You can’t talk about industrial real estate without talking about residential real estate,” said Jim Anthony, CEO and Founder of APG Advisors, during the Market Updates panel. “The Raleigh-Durham apartment market is now about 97% occupied, so where are these people going to live? They literally have no place to live because all the communities around Greensboro, North Carolina are also full.
Anthony mentioned that unfortunately, the type of housing needed to house factory and warehouse workers around his home market — such as labor housing apartments, single-family and manufactured homes for rent — is facing the NIMBYism of surrounding communities.
“We have a dilemma there,” Antony said.
In his keynote, KC Conway, commercial real estate economist and futurist at Red Shoe Economics, went so far as to say that adequate housing is the #1 problem facing the industrial real estate sector. in the Southeast for the next few years. . This is even more pressing, he added, than rising interest rates and building materials inflation – which was north of 24% year-on-year in March, according to the US Bureau of Labor Statistics (BLS) producer price index.
“We’re not doing a very good job with workforce housing,” Conway said. “When you visit industrial sites, also think, ‘Could a prefabricated house community be located there?’ » Could a housing development be on 100 or 200 acres to provide housing for the workforce? It will be our biggest problem in one to three years when we have all this workforce and they have no place to live.
Multi-family developers seem to be taking the initiative to provide housing in the secondary and tertiary markets that house the bulk distribution centers. One example is Prose Concord, a 300-unit apartment community that Alliance Residential Co. just opened in Jefferson, Georgia, a northeast suburb of Atlanta along I-85 that hosts Amazon, Bed Bath & Beyond and Toyota among its largest employers.
Labor determines site selection and design
Conway said during his presentation that he is not worried about labor availability as a long-term issue for the industrial sector, in part because global companies buying or developing sites along the I-85 corridor don’t care. He said auto giants like Hyundai and other automakers will create 12,000 jobs on the stretch between Montgomery and south Atlanta over the next two years, but the region is used to responding. to labor needs.
“Forget the issue of labor availability; we fixed the problem,” Conway said. “We want [workers] from Mississippi and Louisiana, the West Coast and the Northeast. We import the workforce we need, or we create it organically with our community colleges.
The economist said Amazon and FedEx are also more concerned with infrastructure items such as ports, railroads and highways than with labor. Warehousing was one of the first employment sectors to fully recover jobs lost during the COVID-19 pandemic, according to the BLS. In March 2022, the transportation and warehousing sector had 608,000 jobs above February 2020, the last month unaffected by the public health crisis.
During the opening development discussion, panelists agreed that labor availability continues to drive site selection decisions made by developers and their end users. John Barker, president and chief development officer of Red Rock Developments, said labor has become a cog in the supply chain for businesses and occupiers don’t see everything the same way developers do. . He told the crowd an anecdote about a third-party logistics (3PL) provider who told him that when it came to choosing between two similar buildings to occupy, the 3PL company always opted for whichever was the better. closer to a bus stop.
“That says a bit about the workforce and those warehouses, we don’t always think about that,” Barker said.
Steven McGee, director of the Rockefeller Group, went on to say that five years ago a county official told his company that the current industrial site needed a sidewalk, but it didn’t make sense for him. him at the time because the site was not accessible on foot.
“But if you don’t have a sidewalk, you can’t have a bus shelter, and if you don’t have a bus shelter, you won’t have the workforce,” McGee said. “So the things that we put off that didn’t make sense in the short term from a cost perspective might come back to bite us in the long term. We’re trying to take off our merchant-builder hat to put on our builder hat. long-term capital to design what this site will look like in 20 years.
— John Nelson