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 Panelists also pointed to the growth of rates in older, less functional buildings that have more than doubled from four or five years ago, reaching the mid- to high teens per square foot with multiple offers
for each space. Wyler, a Prologis’ managing director and east region head of capital deployment, said it’s a reason to think twice about razing Class B warehouses to redevelop the sites as new buildings.
Also looming is a pullback by Amazon, which in recent years
has been the most expansive and aggressive user of industrial space. But the e-commerce giant is now poised to slow its pace in a major way after recently conceding that it has overbuilt its network of fulfillment hubs, while reporting its first quarterly loss since 2015.
The panelists, who avoided mentioning Amazon by name, were confident that other users would pick up the slack.
“There’s all that other pent-up demand that never is able to find a home,” said Milanaik, Bridge
Industrial’s Northeast region partner. “I think there’s going to be an opportunity that’s still pretty viable.”
Kossar, who moderated the panel, noted that leasing and pricing trends have been positive across the tenant spectrum. The Northeast industrial region averaged 69.4 million square feet of leasing activity in the four years before the pandemic, he said, growing to nearly 100 million square feet in 2020 and 110 million square feet in 2021.
Sandy Haas of Elevation Securities was among more than 200 attendees at “The View from the Top: A Conversation with Leaders in Logistics Real Estate,” an April 26 conference hosted by Real Estate NJ.
Additionally, according to JLL
data, the logistics and food and beverage industries now account for about 33 percent and 12 percent of leasing activity in the firm’s Northeast region, respectively, as of 2021 and 2022 year to date. Both sectors have grown their share since 2020.
According to Winterer, tenants
are increasingly focused on better utilizing buildings that have ceilings as high as 36 and 40 feet, a standard for modern, high-end industrial
projects. Those spaces often go unused, he said, but that figures to change with the growth of automation in logistics facilities.
“The utilization rate is a super important thing for our business these days,” he said. “For our tenants now, it’s all about throughput, it’s all about how much they can get in and get out as fast as possible.”
Any newfound availabilities will provide a chance for users, including
those that are lesser-known and less prolific, to improve that efficiency.
“I think what we’re starting to see are smaller tenants using clear height and actually using that cube space,” Winterer said. “That’s really significant, I think, and it’s also a good thing for all of us because,
as you increase throughput, the tenants are able to make more money. Then we’re able to increase rents as well.” RE
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