Going Up:  Industrial Real Estate Rents Escalate Due to Demand

With vacancy US vacancy rates at a record low of 4.5% in Q2 for industrial real estate, demand continues to outpace supply.  The asking rent for industrial space shot up 6.8% year-over-year, largely pushed by the Class A space around ports and major cities.  In the meantime, companies are struggling to locate and secure warehouse, distribution, and fulfillment space.  Third party logistics providers as well as major e-commerce players including Walmart, Wayfair, Amazon and Chewy are driving the demand.

Amazon continues to invest significantly in its logistics infrastructure to help it return to pre-pandemic services levels of one-day delivery.  For its part, Chewy has been upgrading existing warehouses and adding new facilities to lower fulfillment costs and boost cycle times.

Rents have been rising for all industry property types in each region of the country.

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Uber Freight to Acquire 3PL Transplace

In an arrangement that will trade up to $750 million in common stock of Uber Freight’s parent company, Uber Technologies, Inc. in addition to cash, Uber Freight will acquire Transplace for nearly $2.25 billion from TPG Capital.  Transplace is a global 3PL renowned for its logistics technology and transportation management services.

The acquisition is expected to shore up Uber Freight’s market position as an end-to-end shipper-to-carrier solution.  Uber Freight views Transplace’s presence in Mexico as an opportunity to expand its geographic range.  The acquisition will help Uber Freight to leverage Transplace’s shipper technology and operational solutions to reduce supply chain friction with its own network of carriers and systems.  Uber Freight plans to expand carrier access to shippers and service lines, unite best-in-class technology solutions and to create a transformative shipper-to-carrier platform with enhanced resilience and cost savings for its clients.

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Aging Distribution Networks Leave Retailers Struggling

It’s official.  Retailers were not ready for the transition to e-commerce.  Beyond curbside pickup and home delivery to consumers, there are deeper challenges that still need to be resolved to smooth out the rough edges.

Eschewing major investments in new distribution facilities, leading retailers are instead working to leverage existing infrastructure and maximize the network of stores they already have to facilitate distribution and enhance supply chain performance.  By focusing on what matters most to their customers, the retailers are attacking the most pressing needs first to swiftly improve customer satisfaction at minimal cost.

With the need to improve cost, speed and flexibility, retailers are focusing on basic inefficiencies in omnichannel fulfillment.  Issues like building microfulfillment centers to facilitate fulfillment closer to consumers’ homes, enabling fulfillment of e-commerce orders from existing stores and ship-from-store options can significantly reduce costs while speeding up processing and delivery of orders.

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