Surging home sales could indicate where the next logistics boom will be
- Sales of new single-family homes rose 6.7% month-to-month in May to 689,000 units, according to Census Bureau data, FreightWaves reported. In the South, sales jumped 17.9% month-to-month.
- Adam Mullen, CBRE's Industrial and Logistics Leader for the Americas, told Supply Chain Dive in an interview that where you see a surge in population growth (signaled by new single-family home sales), a surge in industrial real estate is likely to follow.
- According to Census Bureau data, Dallas, Tampa and Orlando are the top three metropolitan areas for positive net population migration, which means a boom in industrial real estate could be on the way for those areas.
Industrial real estate booms are starting to follow housing booms because so many consumers are buying goods online, and so e-commerce companies need to expand their distribution and fulfillment networks to meet growing consumer demand.
The South, in particular, is seeing enormous population growth, and Mullen said that the industrial real estate market between Tampa and Orlando is actually shrinking into one large metro area, which means Tampa-Orlando could be the site of the next big logistics hub.
Even though CBRE is "about a week away" from releasing its second quarter data, Mullen said in the first quarter, "Orlando had the highest net absorption [for industrial real estate] in Florida. A lot of that has to do with the growing population in Orlando."
CBRE told Supply Chain Dive in May that the industrial real estate market is nowhere near its peak as e-commerce companies keep looking for strategic ways to get closer to consumers as rent prices skyrocket in urban areas.
"Over really the last six years, industrial logistics real estate — and that includes everything from warehousing to distribution to fulfillment — has been on a meteoric rise," Mullen said. "And the No. 1 reason has really been e-commerce."
Of course, a boom in industrial real estate means a rise in freight traffic will follow. The increase in trucks to service the logistics hub in Lehigh Valley dramatically changed the landscape, and now the state of Pennsylvania is struggling to find a way to expand roads to accommodate the surge in heavy traffic.
Freight industries are already expected to have an extremely strong year of growth in 2018, and the jump in new single-family home sales is just another data point supporting that expectation.
According to Mullen, Tampa-Orlando isn't the only metro area with a major upcoming industrial real estate boom. Dallas, Texas; Phoenix, Arizona and Brooklyn and Queens, New York are other hot markets to watch.
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