On January 17, JLL hosted its annual Industrial Exchange focused on e-commerce and logistics in Miami, Florida. We were lucky enough to have JLL subject matter experts from across the country join and share their knowledge with local clients, investors and the brokerage community. Topics discussed ranged from global trade to NAFTA to the retail conundrum. Outlined below are the key trends to look out for according to JLL’s industrial leaders:
Increased global trade flows: Ferried by larger ships and neglected domestic infrastructure have resulted in congestion issues for cargo transportation and corporate supply chains.
Last mile delivery: In response to ballooning freight costs, many B2C distributors are moving closer to the customer. By using more expensive prime real estate, companies can save on shipping costs. Some are also mulling the use of wellplaced drop boxes for customer pick up.
Despite the headlines, traditional retail is not on its death bed: Many e-commerce retailers are embracing brick-and-mortar stores to increase systemwide efficiency, alleviating strains such as returns and exchanges.
Two technologies to look out for: Are the use of automation in place of warehouse labor, saving both costs and land required for a distribution center. Autonomous driving is another area with large potential, specifically related to intermodal drayage, where many driver hours are spent.
Industrial real estate has become institutionalized: Compressing cap rates as investors look to place capital. The emphasis of metrics like FFO and AFFO growth has reduced the incentive for many owners to sell, further reducing the supply of industrial assets for sale.
South Florida industrial: With little land for development, some experts predict rents to reach $11.00 per-square-feet (NNN) in the next 7 to 10 years. With this attractive potential, South Florida has seen substantial investment this development cycle from institutional owners looking to gain from strong industry fundamentals.
About the Author
Marc Miller, JLL Research Manager
Marc is the JLL Research Manager for the State of Florida, overseeing commercial real estate analysis across six markets with a strong focus on examining economic and demographic trends and variables that affect the performance of the office, industrial and retail markets in addition to the state’s overall economic health.