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Labor Scarcity is Reshaping the Industrial Landscape

While labor is only one factor among the many factors that drive tenants’ supply chain

decisions (other key factors include access to transportation infrastructure, government
incentives, demographic trends and occupancy costs), labor is increasingly becoming a
driving force for tenants’ location decisions. The focus on labor is a result of the
significant demand growth within the industrial sector, which is creating a severe
shortage of the workers needed to effectively operate industrial facilities. Developers are
also working with tenants across the country to develop new facilities to capitalize on
demand growth, and new deliveries are expected to reach record levels for the next
several years. These new deliveries will likely further exacerbate labor scarcity within the
industrial sector, and labor availability is expected to become an ever more important consideration within tenants’ locational decisions. However, we have identified several markets that should see positive real estate fundamentals as a result of labor availability and comparatively lower wage rates.