Will the US industrial market hit a tipping point with supply, demand this year?
Despite net absorption in the industrial construction industry sitting 9.4% lower at the end of 2022 than it was in Q3 2022, construction of industrial and warehouse facilities remains at an all-time high as tenant demand remains strong, boosting confidence that this trend will continue into 2023 and beyond.
Supply And Demand
Balancing supply and demand is always a tightrope act in construction, and vacant space costs money, so while some in the industry are concerned that the number of new facilities being built will be unable to fulfill their potential, we see this as an opportunity for innovation. We believe that the industrial development sector is capable of agility and flexibility and that these specialist constructions are suitable for a multitude of purposes beyond those originally intended. For example, many are as suitable for use by the retail market as they are for industrial storage.
The pandemic created a surge in demand for warehouse and storage space as consumers turned to the internet to fulfill their shopping needs. Industry experts believe this trend to be unsustainable and anticipate a reduction in usage this year as the economic crisis continues to dominate headlines. There is a strong likelihood that some developers that see this share of the market space declining will begin withdrawing applications for new sites, or decide against developing existing sites. Should this prediction come to fruition, there is a possibility that this will translate to increased interest in newly built developments. In particular, it is anticipated that those sites that demonstrate multi-use potential will be of greatest interest, potentially resulting in increased demand.
The construction market is adaptable and the risk of oversupply is balanced against the needs of the businesses that are choosing to move out of previous industrial hubs, such as California, seeking more attractive rental rates and larger facilities to support their own expansion goals.
Opportunities In Austin
Expansion is certainly the aim of the new builds underway in the country, with Dallas-Fort Worth boasting 81 million square feet of warehouse space, whilst Phoenix is developing circa 47 million square feet to create additional industrial storage and distribution facilities. Despite the disappointment of the cancellation of the Amazon distribution center in Austin, work is still underway on 8.3 million square feet of industrial developments. Interest in rental opportunities has already been expressed by household names Tesla and Samsung, amongst others, which is reassuring for those involved in the builds.
Challenges To Overcome
A recent market insight report from Austin-based firm ECR  suggests that despite the optimism expressed by the increased volume of under-construction build projects, the industry is plagued by vacancies with a notable lack of sufficiently skilled construction workers available to support these developments. With our decades of relevant industry experience, contacts and vision, we see ourselves plugging this gap and working in conjunction with developers to supply the labor necessary to make these builds a reality.
With our tailored recruitment strategies and marketing expertise, we are capable of identifying and promoting the opportunities offered to talented candidates in the American construction industry. We take the time to truly understand the needs and motivations of workers and can support local construction firms to develop an attractive benefits package that will satisfy the needs of workers in a competitive hiring market.
By working with employers and job-seekers in this fashion, we can create bespoke recruitment solutions that allow builds to continue apace, meeting exacting quality standards and realizing profits more quickly as the developed spaces become available for tenancies to begin - on or ahead of the planned schedules.