CRAIN’S: Are the market conditions driving strong demand likely to change this year and in 2023? For example, will e-commerce businesses continue to need industrial space at similar rates?
ROSEN: It’s hard to predict exactly how demand will develop in the long term, but I have a good view of the industrial market in the short term. It is safe to say that market fundamentals are stronger than they have ever been and demand continues to outstrip supply. We’ve seen the rate of e-commerce growth decline somewhat from recent staggering highs, but I’m optimistic that e-commerce will continue to be a major driver of demand for the foreseeable future.
CRAIN’S: What are we doing on the market to improve the supply of industrial goods?
ROSEN: Developers and local municipalities need to get creative to meet the high demand in such a limited land market. The “highest and best utilization” analysis for sites across the state has changed dramatically. Developers are investing in new sites, undertaking previously prohibitively expensive environmental cleanups, and redeveloping underutilized sites, even though “underutilized” simply means the site has a offices. Municipalities that have embraced industrial development have largely benefited from jobs, tax revenue, clean sites and private investment.
CRAIN’S: How does the shortage of industrial space affect lease prices?
ROSEN: Due to the acute shortage of vacant space, landlords have been able to aggressively raise rents. Rents have been rising at a staggering rate, easily surpassing previous all-time highs.
CRAIN’S: What creative solutions are organizations that need industrial space using to meet their needs in today’s market?
ROSEN: In great evils, great means. Given the ultra-competitive and expensive landscape of industrial spaces, tenants need to be aggressive in securing space and creative in maximizing the space they get. For example, we have seen a continued proliferation of automation to maximize efficiency and utilization, and innovations in automation are contributing to the changing footprint of industrial facilities. Developers and landlords need to work closely with tenants to meet their ever-changing needs. What works for one tenant may not work for another. This is why fostering strong relationships is essential.
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