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Unprecedented Disruption has Reshaped the Future of Logistics

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Cushman & Wakefield releases 2021 Global Logistics Outlook

Cushman & Wakefield (NYSE: CWK), a leading global real estate services firm, has released its 2021 Global Logistics Outlook. The report analyzes key drivers affecting growth, global leasing dynamics and provides an outlook for the sector.    

“The unprecedented disruption caused by COVID-19 pandemic and changing consumer behaviors has reshaped the future of the logistics industry by exposing global supply chain vulnerabilities and accelerating technological advances. As a result, a variety of global trends have emerged, propelling the sector forward in new ways,” said Cushman & Wakefield’s Jason Tolliver, Investor Lead, Logistics & Industrial Services, Americas. 

North America

The North American industrial market experienced growth despite the COVID-19 pandemic wreaking havoc across the globe, as well as more local disruptions including hurricanes and wildfires. It has proven once again to be one of the most resilient asset types. Although North American new supply outpaced demand for the second year in a row, with 378 million square feet (msf) of completions, demand came in at 287 msf, surpassing 200 msf for the seventh consecutive year.

“COVID-19-induced lockdowns did cause a slight slowdown in demand in the first half of the year compared to prior years. However, even this combined with the large volume of supply has still not been enough to fully satiate tenant demand and to allow vacancy rates to begin to rise significantly,” said Tolliver. “Toward the end of 2020, North American industrial vacancy stood at 4.9%—just a 30 bps increase over 2019 and Canadian markets registered the lowest vacancy rates at 2.5% and Mexico City following at 3.0%.”

EMEA

“Europe’s logistics sector is grappling with supply constraints, stemming from a combination of a lack of developable land and strict planning regimes. In contrast to pre-Global Financial Crisis (GFC) when speculative development represented roughly 80% of new construction, post-GFC has been characterized by predominantly built-to-suit development that has led to severe supply shortages in most of Europe’s core logistics markets. As speculative construction resumed post-lockdowns more product came to market, pent up demand was released and leasing activity accelerated,” said Lisa Graham, Head of EMEA Industrial Research for Cushman & Wakefield. 

Based on year-end data, vacancy continues to trend downward in most of Europe’s key logistics hubs. Vacancy of approximately 4% in Dutch and UK markets and vacancy hovering around 2% in Rotterdam, Lyon, Prague and Budapest, points to a severe lack of stock that, so far, a rise in speculative construction has been unable to alleviate. Furthermore, increased demand from e-retailers and 3PLs, as they expand their logistics footprint, has offset any vacancies created through tenant bankruptcies during 2020.

APAC

In broad terms, the regional industrial market remains resilient. Out of the 34 key markets covered within Asia Pacific, 15 are considered landlord-favorable with six being tenant favorable and the remaining 13 in neutral territory. The status quo has largely been maintained year-to-date, with only Singapore showing any significant change to becoming more tenant friendly, though this is restricted to certain parts of the industrial market. This is in stark contrast to the office sector within the region, which has seen a much more definitive shift towards more tenant-friendly conditions.

“Industrial rents have shown steady growth in the year-to-date in key Indian and South East Asian markets where rents in Delhi, Ho Chi Minh City, Kolkata, Jakarta and Hanoi have all increased by over 2.5%. Rents have been held broadly flat in Australia while they have seen a slight uptick of 2% in the Chinese logistics market, due to boosted demand from online shopping soaking up some of the vacancy,” said Dr. Dominic Brown, Global Head of Demographic Insights, APAC-lead for Cushman & Wakefield.

Most Expensive 
RankCountryMarketUSD
   SF/yr
1UKLondon$ 24.90 
2ChinaHong Kong$ 19.93 
3U.S.San Francisco Peninsula, CA$ 18.25 
4SwitzerlandGeneva$ 17.97 
5SingaporeSingapore$ 16.68 
6JapanTokyo$ 14.71 
7NorwayOslo$ 14.68 
8U.S.San Francisco North Bay, CA$ 14.62 
9U.S.Puget Sound – Eastside$ 14.31 
10SwitzerlandZurich$ 13.97 
Least Expensive 
RankCountryMarketUSD
   SF/yr
1IndiaHyderabad$2.45 
2IndiaAhmedabad$2.61 
3TurkeyIzmir$2.79 
4TurkeyAnkara$3.07 
5IndiaNCR$3.27 
6IndiaChennai$3.41 
7U.S.Memphis, TN$3.61 
8IndiaKolkata$3.70 
9GreeceThessaloniki$3.72 
10U.S.Columbus, OH$3.95 

“The global logistics sector not only showed resilience during the strict first half lockdowns but went on to benefit from consumer and business reactions to the pandemic during second half. Broadening e-commerce, both geographically and by product range, will be a key driver of new space demand over the next decade,” said Tolliver. “In a post-COVID-19 world, there will be greater focus on using real estate to leverage cost across the whole supply chain, better positioning businesses as they navigate a B2C business model, reshoring, inventory management, labor issues, transportation and ESG. Together, these factors will govern location strategy.”

The Inland Empire Business Journal (IEBJ) is the official business news publication of Southern California’s Inland Empire region - covering San Bernardino & Riverside Counties.

Transportation

Inland Empire Regional Chamber of Commerce Event to Spotlight Brightline West

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Program will highlight what’s next for high-speed rail in the Inland Empire

High-Impact Event Alert

Brightline West will be featured during the Inland Empire Regional Chamber of Commerce’s “High-Speed Rail is Headed to the Inland Empire” event on Wednesday, January 11, from 11:00 a.m. – 1:30 p.m. at Jessie Turner Community Center in Fontana, CA, which the County of San Bernardino is a title sponsor. The program will feature an update on Brightline West, including the project’s role in regional and statewide connectivity, its benefits to the community, what to expect in 2023, and how the public can stay engaged.

Featured panelists for the program are:

  • Fiona Ma, Treasurer, State of California
  • Ray Wolfe, Executive Director, San Bernardino County Transportation Authority
  • Sarah Watterson, President, Brightline West 
  • Edward Ornelas, Jr., President/CEO, Inland Empire Regional Chamber of Commerce
  • Matt Burris, Deputy City Manager of Community Development, City of Rancho Cucamonga

Brightline is the only private provider of modern, eco-friendly, intercity passenger rail service in America. The company currently serves Miami, Aventura, Fort Lauderdale, Boca Raton, and West Palm Beach in Florida, with its Orlando station beginning service in 2023. Recognized by Fast Company as one of the Most Innovative Companies in travel, Brightline offers a guest-first experience designed to reinvent train travel and take cars off the road by connecting city pairs and congested corridors that are too close to fly and too long to drive. Brightline West will build on this award-winning service by connecting Las Vegas and Southern California, with stations in Las Vegas, Victor Valley, Hesperia, and Rancho Cucamonga, and connectivity to Metrolink’s regional rail network.

“This will transform transportation in Southern California and Las Vegas for generations by providing a fast and efficient connection that gets people out of their cars, reduces traffic congestion and decreases air pollution.” -Fiona Ma, California State Treasurer

KEY FACTS:

  • Expected travel time is approx. 2 ¼ hours
  • Our route is 2x faster than driving
  • Zero-emission, electric train sets
  • Expected top speed is 180 mph
  • 400,000 tons of CO2 removed annually by reducing 3 million vehicles
  • Connections to Metrolink and planned future connection to California High-Speed Rail in Palmdale
  • Convenient station location on the Vegas strip (I-15)

For more information and to register for the event, click here.

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Transportation

Rancho Cucamonga and SBCTA Approve Sale of Property for Development of Brightline West Full-Service Transit Station

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Agreement clears path for high-speed passenger rail service in the Inland Empire connecting Rancho Cucamonga, the High Desert and Las Vegas

The City of Rancho Cucamonga City Council and the San Bernardino County Transportation Authority (SBCTA) Board of Directors have approved the first step of the sale of a five-acre portion of the jointly owned property at Cucamonga Station to Brightline West. The agreement clears the path for Brightline West to develop the property at the northwest corner of Milliken Avenue and Azusa Court, and build the first high-speed rail station in the Inland Empire connecting Rancho Cucamonga, the High Desert, and Las Vegas. Brightline is the only private provider of modern, eco-friendly intercity rail service in America. The company currently operates between Miami, Fort Lauderdale, and West Palm Beach in Florida and is scheduled to complete construction to the Orlando International Airport by the end of 2022.

Cucamonga Station will go through a transformation in the coming years, making it the region’s global connectivity point and destination location for everything California has to offer. Transportation modes at Cucamonga Station will provide service through high-speed rail, the Metrolink San Bernardino Line, and Omnitrans Bus Rapid Transit and local bus service, as well as serve carpool commuters. Plans are also moving forward for a sub-terranean loop to Ontario International Airport (ONT), led by SBCTA, where passengers will be transported in just a few minutes between Cucamonga Station and airport terminals. In anticipation of deploying this service, Omnitrans has already launched ONT Connect, a regular shuttle service from Cucamonga Station to the airport that operates daily every 35-60 minutes.

“This agreement is a culmination of several years of working together with our partners and is a key milestone to bring high-speed rail to the Inland Empire,” said John Gillison, City Manager for the City of Rancho Cucamonga. “Cucamonga Station will serve as a global connectivity anchor within the newly branded HART District.”

“We are pleased to take this next important step forward in bringing enhanced transit connectivity to one of the fastest-growing population and economic centers in the country,” said Art Bishop, President of the SBCTA Board of Directors and Mayor Pro Tem of the Town of Apple Valley.

The Cucamonga Station will be strategically located within the HART District – a new transit-oriented, mixed‑use, housing, retail and commercial district that elevates the area into a walkable, culture-rich experience. Located within the area of Haven Avenue, Arrow Route, Rochester Avenue and the Transit station in Rancho Cucamonga, it will serve as a crossroads of food, travel, culture and commerce. The HART District is poised to be the next key economic catalyst in the region. To learn more, go to www.TheHartDistrict.com. The City of Rancho Cucamonga, Greater Ontario Convention & Visitors Bureau (GOCVB)Omnitrans, the Ontario International Airport, and San Bernardino County have established a joint effort for the project development and outreach programs. Additional project partners will come onboard as the project continues to move forward through the development process.

The Brightline West Cucamonga Station in Rancho Cucamonga, CA, will be home to the first high-speed passenger rail service in the Inland Empire connecting Rancho Cucamonga, the High Desert and Las Vegas.

Key Points to this Important Regional Project:

  • Third-party analysis by Beacon Economics, a well-respected Inland Empire-based firm
  • Construction is estimated to take three to four years, with ongoing operations beginning in 2026-27
  • More than $300 million dollars in construction spending in Rancho Cucamonga and more than $5 billion dollars in construction spending in San Bernardino County during the next four years
  • Estimated to support nearly 11,000 jobs per year across San Bernardino County and more than 700 jobs per year in Rancho Cucamonga during construction
  • Rancho Cucamonga can expect to receive additional indirect spending in the local economy from the jobs generated particularly during the construction phase
  • Much of the new jobs will be in the construction, architecture and engineering fields
  • The City could receive an additional $1 million dollars per year in property tax/sales tax revenues during the construction (3-4 years)
  • Ongoing operational revenues of another $500,000 per year for Rancho Cucamonga could be possible from local sales and property tax once the station is in full operation
  • Project will stimulate housing demand throughout San Bernardino County during construction and add tens of thousands of jobs (direct and indirect) to the countywide employment base
  • Countywide sales tax should increase near $100 million dollars and more than $70 million dollars from property tax during construction
  • Long-term operational impacts countywide will be in excess of $6 million dollars from property/sales tax
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Transportation

CA Inland Empire District Export Council (CIEDEC) to Present Cal-Mex Aerospace Expo on Sept. 22

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The California Inland Empire District Export Council (CIEDEC), a diverse group of volunteer trade professionals dedicated to helping develop export sales and thus contributing to the national export program, will hold its inaugural Cal-Mex Aerospace Expo on Sept. 22 at the San Bernardino International Airport (SBD).

The expo’s goal is to raise awareness and connect Inland Empire aerospace & defense (A&D) and space manufacturers with the supplier needs of more than 100 companies in the nearby Aerospace Cluster of Baja California, the largest in Mexico. Companies located in Mexicali and Tijuana, Baja California, are just 2.5 to 3.5 hours from companies in the Inland Empire. Due to geographic proximity and the demand for speed to market, Mexico’s nearby aerospace sectors can provide expanding sales opportunities for Inland Empire A&D manufacturers interested in exporting their products, components, machinery, and services.

“CIEDEC is most pleased to organize this strategic collaboration between the Southern California and Baja aerospace industries,” CIEDEC Chairman Bob Spence said. “This is a necessary linchpin in regional cooperation, which is necessitated by our new world order.”

Aerospace industry experts will share updates on trends and policy; export control/International Traffic in Arms Regulations (ITAR); AS9100 certification and upcoming changes; cybersecurity essentials; drone pilot training; an overview of the aerospace sector in Mexico; aerospace export opportunities in Mexico; doing business in Mexico; and a B2B session.

“Aerospace is one of the largest and critically important sectors for our regional and national economies, and we are thrilled to support the District Export Council’s efforts to promote the growth of U.S. aerospace manufactures through cross-border sales opportunities in Mexico,” said Eduard Roytberg, director of the U.S. Department of Commerce’s Commercial Service office in Ontario, California. The Commercial Service is part of the Commerce Department’s International Trade Administration.

The speakers will include Tomás Sibaja, president of the Aerospace Cluster of Baja California, Mexico; Senior Commercial Specialist Silvia Cardenas (U.S. Embassy in Mexico City) and Senior International Trade Specialist Erica Ramirez (U.S. Commercial Service in the Inland Empire, California); David Graham, vice president of Aircraft & Component Maintenance at Unical 145/Unical MRO; and Kimberly Benson, president and CEO of Zenaida Global and an administrator for the UAS Center at SBD.

“The Inland Empire and Baja California share common interests and values in this sector,” Sibaja said. “The timing is now to engage our companies in business encounters and venture opportunities.”

SBD is the title sponsor for the expo, supported by the U.S. Commercial Service and the Aerospace Cluster of Baja California. Additional sponsors include IAPMO SCB, Alliance Buyers Group, EMG Global Business Solutions, Inc., Tablemation Solutions, ExIm20/20 Group, and ERS Consulting Services.

“SBD International Airport is pleased to support our aircraft maintenance and aerospace partners around the world,” SBD CEO Michael Burrows said. “This vital industry supports all business lines at SBD and airports across the globe.”

Early-bird tickets are $25 if purchased by Aug. 31, and $35 starting Sept. 1. For tickets, sponsorship, and exhibition opportunities, and more information about the event, visit https://www.eventbrite.com/e/cal-mex aerospace-expo-2022-tickets-376792445347. To learn more about CIEDEC, visit ciedec.org.

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