Industrial Real Estate Market Changes and Challenges | Q3 2022

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A guest blog by Troy Adams, Vice President of Real Estate at NFI

Supply chain volatility has changed how companies store and distribute goods. As a result, the industrial real estate sector has thrived as organizations pursue diversification for fulfillment processes, and manufacturers move their operations onshore. Consequently, new challenges are emerging, particularly concerning transporting products from the ports to inland distribution centers and finding the right facilities to support those moves. Troy Adams, Vice President of Real Estate at NFI, weighs in on market changes and challenges and how to succeed in this new landscape. 

Current Warehouse Availability is Scarce

Despite global inflation and recession concerns, demand for industrial real estate continues to outpace supply. This imbalance is particularly acute for port-centric transload and domestic cross-dock facilities. Users have limited space to choose from, with options near ports and inland hubs essentially non-existent. The few available facilities lack the features required by today’s shippers — proper loading, traffic flow, and onsite trailer and container storage. With few national industrial real estate players focused on developing these facilities, users are forced to pay premiums to secure the few existing options, move to a different market, or, more likely, utilize an inadequate facility.

New Builds Allow for Customization

Users are also becoming discerning, disqualifying inadequate facilities that won’t support the volumes required by today’s supply chain. Many now prefer a new build, where they can specify the preferred loading dock to trailer parking ratio, provide multiple inbound and outbound driveways to safely improve traffic flow, or take advantage of clear span construction to maximize productivity inside the facility. Sometimes the right facility may be achieved through the redevelopment or substantial modification of an older facility to achieve these same goals more quickly. 

…But New Construction Faces Challenges

Though the appetite for new-build warehouses is rising, local municipalities have sought to reduce warehouse and distribution facility development through land use controls and zoning changes. Hours of operation restrictions, truck traffic limitations, noise ordinances, and environmental impact assessments have made the road to entitlements far less certain. This process can be complicated, expensive, and time-consuming. 

Addressing Challenges in the Real Estate Market

With a 90-year history as a family-owned and operated company and a footprint of more than 65 million square feet and 16,000 employees across North America, NFI is already a stakeholder in many communities where new logistics facilities are being developed. Our company has significantly grown our real estate portfolio over the last few years and, more recently, has focused on developing cross-dock, transload, and industrial outdoor storage facilities. These build-to-suit projects provide our customers with the right facilities to achieve long-term, sustainable growth.

Currently, the NFI Real Estate team has 3 transload/crossdock build-to-suit projects under construction, including the following:

  • Suffolk, VA — Transload facility located in the Northgate Commerce Center, with 138 doors and 450 trailer spots 

  • Baytown, TX — Transload facility located in the Cedar Port Industrial Park, with 200 doors and 960 container/trailer spots 

  • Joliet, IL — Domestic Crossdock facility located at the Joliet UP Global IV Intermodal, the nation’s largest intermodal hub, with 140 doors and 570 trailer spots

NFI handles all aspects of the real estate development and construction process, utilizing our deep industry knowledge, local relationships, and in-house expertise to ensure that your facility is built exactly to your specifications. As NFI continues to offer customized solutions, learn more about the ways our team can develop and construct facilities that address your current operation while enabling future growth.

Troy Adams, Vice President of Real Estate at NFI, is responsible for providing real estate and supply chain solutions to our customers across North America.