The Big Five: Opportunities for 2022
By John Salustri
We’ve all heard it before: With every challenge comes opportunity. Appropriately then, IAMC member Marcus Rose, real estate manager for NFI Industries in Camden, NJ, sees 2022 as a time of opportunity. Of course, challenges will remain. But as you will read in Rose’s Big Five, turning these challenges into opportunity will take patience, perseverance and planning.
Number one on Rose’s list is labor. While the talent shortage has become a universal issue and has increased cost of labor (specifically warehouse and transportation) remain a significant headwind, the logistics and industrial real estate market overall might have a secret weapon. “The industrial sector has historically been the ugly duckling as compared to office and retail,” he says. “These markets have historically received more institutional attention and have plainly been seen as more attractive to top real estate talent.”
However, he now believes that the overall media coverage during the past 18 months has played an important role in highlighting the impact that the supply chain and logistics have had on our daily lives. “The challenges that are being reported on within our industry will naturally attract young bright minds that are looking to solve these issues,” he believes. “I’m excited to watch more college grads take interest in and consider careers on the industrial and logistics side of real estate.”
Number Two on Rose’s list is the continued growth in third-party logistics. 3PL has remained the most active user of space in 2021, at nearly 30 percent of market share in spaces above 100,000 square feet. “As one of the oldest and largest privately held 3PL providers in North America, NFI has always focused on strategic growth,” he says. That four of the firm’s top five clients were deemed essential during the depths of the pandemic pointed to the ongoing need to choose wisely for both operational and cultural fit. “We’re excited about our continued growth into 2022, but we also understand the importance of evaluating prospective customers and strategic partners. This is not about growth for growth’s sake, but about cultivating a customer-base that aligns with our values and understanding the importance of long-term decision making.”
Next up is “technology,” says Rose. “Frankly, I feel that the logistics/industrial space is fragmented as it pertains to technology. Constantly evolving technologies emerging around building automation and transportation are very exciting for us as an industry.” However, the ability to share information across multiple platforms and create greater operational and cost efficiencies can sometimes be the challenge. “Understanding what data matters and how to best interpret and execute on that data,” will advance corporate strategies for growth going forward. He noted that NFI is already growing its digital capabilities through more integrated lease management and its pursuit of tracking applications.
Number four is infrastructure. Recent congressional movement on repairing our infrastructure at the ports and highways “puts us on a good path,” he says, citing firms like chipmaker TSMC, which plans to go online with a new Phoenix plant in the next two or three years. Such growth speaks to the rise of onshoring, and the infrastructure to support and advance such home-grown businesses is vital. However, as Rose points out, “This is a slow process. Infrastructure doesn’t get improved overnight. But this is a really good start and great for jobs.”
Finally comes Rose’s view of how to overcome--at least start to overcome--certain land restraints and the increased building and material costs that have restricted growth in many markets. In managing a real estate portfolio for a 3PL provider, he finds that opportunities often come in reevaluating efficiencies of the current inventory in concert with committing to long-term strategies around core assets/markets. Yes, construction costs are skyrocketing, and material lead times remain pushed out. But he points out that these issues are affecting everyone in our industry, which puts us on an even playing field. “Those who are able to provide flexibility, creativity and transparency typically are more likely to succeed in providing quality solutions to their customers,” he says. NFI currently has five projects in the works, two of which should complete in 2022. “The opportunity simply comes in strategic planning.”