CBRE: Inland hubs in South and Midwest to rise as coastal supply chains squeezed
Pandemic-era reckoning will disrupt old logistics, usher-in new entrepreneurs
Go inland, young entrepreneur. The property assets with the most upside in America’s commercial real estate future aren’t prime development packages in SFO and NYC, or any major seaport for that matter.
Nope, in the COPVID-19 era, the new American supply chain will run between key inland locations throughout the southern and midwestern states, much to the benefit of several smaller cities and towns, based on recent comments by CBRE.
According to CBRE, inland hub markets served by roadways passing through smaller cities and towns are already developing that will disrupt coastal urban seaport supply chains. Inbound hubs are a commercial extension of onshoring, the acceleration of which is a natural consequence of COVID-19.
There’s less coming in through seaports and urban coastal warehouses are already expensive. So Americans will build more domestically and ship it to one another overland. To make that work, land needs to be bought and warehouses and industrial sites built in little towns dotted across the country.
According to the CRBE’s comments, locations along major inland routes will benefit most greatly from the rise in commercial investment and resulting economic activity. These areas include key inland hub routes around Atlanta, Memphis, and the ideally situated Greenville, South Carolina.
Routes leading to and from Chicago in all directions also stand to gain. That brings the midwest solidly into the conversation, with rural Indiana and Ohio on the route east, and the expanses of land in Missouri and Oklahoma west.
That’s a lot of new economic opportunity on the horizon in some hard-hit areas. But making the switch will be difficult and complex for investors, manufacturers and brands; a point well-captured by Mark Solomon’s recent article on Freightwaves:
“For three decades, manufacturers and retailers have focused on making their supply chains as efficient as possible. Their ‘just-in-time’ inventory management model combined low-cost production in far-flung locales like China with fast-cycle distribution such as airfreight to rush goods to market while holding minimal buffer stock . . . Post-pandemic reckoning could bring that era to an end.
Could and will.
Changes in how humans and goods move in the pandemic-era have led to a sharp acceleration in the rate of ecommerce adoption and irreversible disruptions in the retail and manufacturing industries. That takes us to the need for these new inland hubs, and the resulting opportunity for CREs, brands and ‘small town’ American entrepreneurs who see the big picture need for automated manufacturing and warehousing space.
Investors previously occupied with squeezing a few points out of a co-working space in downtown SFO, or re-vamping a block of storefront in Manhattan, may do better over the several quarters to put their money and effort into creating assets at the heart of America, where investment is both needed and likely to pay future dividends.