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What do you think will be in store for the logistics real estate market in 2021?
As we look ahead to 2021, certainly on the industrial and logistics real estate side, we see continued growth in the market, demand for our space, challenges to solve, buildings to construct, and solutions to deliver to customers and shippers. Where the other sectors go remains to be seen. I am assuming that we continue on the trajectory that these vaccines are effective, we should start seeing pre-pandemic type activity towards the latter part of 2021. The industrial market really didn’t slow down in 2020, so we see continued growth.
What will be the importance of community partnerships to industrial real estate in 2021?
One thing that we thought about in 2020 but will become more important going forward is the partnership that we have with local communities and municipalities in getting projects approved. Shippers and our customers are asking for new types of facilities faster than ever before. New demands to solve volume projections are greater than they’ve ever been before, so we are under pressure to deliver that solution faster and more efficiently. I think folks have seen that lots of retail locations may be going away and communities need to think long-term to figure out how to provide employment opportunities and economic vitality for their locality the right way. We’re not coming in and saying, “this is how you have to do it,” but we have a very long view and try to partner with the communities that we work and develop in to figure out the community needs and also the needs of our customers. That partnership, as we go into 2021, will become more important than ever before to work through some of these challenges to solve collective problems.
What advice would you give to shippers who are thinking about their networks?
As shippers and our customers look at new facilities, new demands, or they think about their supply chains, we understand that it’s very dynamic and stuff is changing very rapidly. Similarly, we think decisions need to be made relatively quickly. I know that is difficult sometimes, but shippers need to talk through flexibility and think about how to solve their problems as quickly as they can. The market is moving incredibly quickly and some opportunities just won’t be there as you work through a long process. We understand that supply chains change and networks will evolve, and that is certainly something that we see from lots of our customers. We’ve had success with some customers being involved in those conversations early to help give guidance and advice through the process of “this project could work here in location A because of reasons X, Y, and Z; versus location B because it has these other things going on,” so I think that is an important partnership. We always look at our customer needs as a partnership and here at NFI, we will continue that into 2021 and beyond.
How do you think that shippers will assess their supply chains moving forward?
I think lots of folks have seen volumes increase dramatically and are projecting that to remain the same going forward, and how that will impact their supply chains remains to be seen. The demographic shifts also remain to be seen. People in 2020 moved from the cities to other places where they can work remotely, so will that population and demographic shift have an impact on the supply chain? We don’t think that manufacturing is all of a sudden going to come back to North America, it certainly could in bits and pieces, but Southeast Asia will still be a major manufacturing hub for the global economy. And so, the supply chain that exists from Southeast Asia and distributes throughout North America will still remain, but some of the opportunities to start manufacturing here in the US will take time to develop. There will be opportunities that will impact how customers plan their supply chains now and going forward. Next year will be a big year where folks evaluate what happened and how we responded to it. How did our supply chains perform? For the most part, supply chains performed pretty well across lots of groups, but 2021 will have more planning and projecting on what needs to change in networks and how we move those pieces around.
How do you think e-commerce will continue to evolve industrial real estate?
As we continue to look forward into 2021, the continued growth of e-commerce and its impact on the logistics and industrial real estate market will continue to be dramatic. As folks think about their network and how they solve delivery to their customers, more and more will go directly to a consumer, whether that’s at their house or someplace else, as opposed to a retail store. So, networks will continue to have to evolve to be able to solve that problem. They will continue to have evolving definitions of what that means, and the speed of how our shippers get their products to their customers will continue to impact both where facilities are located and the types of facilities that may be needed to solve that problem. We see lots of new types of facilities that are smaller buildings with lots of parking, and even the possibility of driving into the buildings as opposed to having loading docks, or in addition to loading docks, in order to facilitate package delivery or smaller products. The days of a big distribution center over a million square feet are probably still out there, but probably has less of an impact on supply chains than smaller facilities, closer to the population, with some big regional distribution centers in central locations to be able to solve those challenges. But it is certainly something that we are thinking about and our customers are thinking about.
How will investment capital impact industrial real estate in 2021?
The other forecast that we have for 2021 is the continued interest of capital investing in the industrial and logistics real estate space. We think institutions will continue to allocate and have an interest in investing in our space, which will continue to drive the demand for new products, new opportunities, and drive up the prices of existing products. We don’t see anything slowing down from the dynamics that’s happened over the last six months in 2020. There will continue to be new capital that never invested in industrial before and is trying to get into this space.
What are you most excited about in 2021?
Here at NFI Real Estate, we’re really excited going forward in 2021 to continue to build our capacity and our platform to solve challenges and problems for lots of our customers and new customers. We approach things as a partnership and try to take in all the information that we have as a large supply chain company and make good decisions as a real estate owner. We’ve continued to build our team and we’re excited where we are at today and feel like we are poised for a lot of growth going into 2021 and beyond. We have a number of projects under construction right now. We intend to start some new projects in 2021. We remain focused on investing in the right assets and in the right locations to solve the needs of our customers and shippers throughout North America.
The other thing in 2021 that I am very excited to see is how the team continues to grow. We really learned how to work in a different way together over the course of 2020, and it was incredible to see how everybody stepped up and did their part. We shut the office down one day and the next day we were all working remote and we all figured it out together, performed, solved challenges and problems, and came up with new ideas and new solutions very well in 2020. That makes me feel excited for what we can do in 2021 together. It’s fun to be part of a good team and have great people within the organization. We have a lot of pride in who we are at NFI and in the real estate group. The whole organization performed dramatically well for our customers, our employees, and the communities that we operate and live in. It feels very positive going into 2021 and lots of excitement as to what we can do together, going forward.
Michael Landsburg is the Chief Development Officer of Real Estate at NFI and has been with the company since 2005. He is responsible for managing the real estate activities for the NFI owned and leased portfolio which spans over 50 million square feet of logistics space. Michael and his team develop customized industrial real estate solutions for shippers across North America.
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