RE Journals Logistics Summit Takeaways
RE Journals hosted the Chicagoland Supply Chain, Distribution & Logistics Summit on October 24, 2023 with NAI Hiffman Executive Vice President – Industrial Services, Kelly Disser (pictured above, far left) serving as a panelist.
We sat down with Kelly to find out his biggest takeaways from the conference.
How has the RE Journals Supply Chain, Distribution & Logistics Summit developed over the years?
I’ve attended this summit in years past, there continues to be great panels and solid discussion. It is consistently a well-attended event with a good audience and there are strong panels and panelists which results in both educational and entertaining conversation.
On your panel, what were some of the most pressing issues discussed?
One of the topics discussed was the fact that industrial market user demands are recalibrating and re-stabilizing following the rapid pace as well as increased consumer demands/buying patterns emerging from Covid. Also, supply chains for many materials and goods were disrupted during covid shut down. This resulted in higher demands for materials required to be on hand for suppliers and distributors – at the time, those companies could not obtain product through conventional channels, so inventories increased – thus the surge in need for warehouses and storage yards. Demand remains relatively strong, albeit at levels which more closely resemble 2018 or 2019 as opposed to 2021 and 2022. It may feel worse than what is reality (+/- 15M sf net absorption YTD) as we are coming off historically high levels of new construction and net absorption – which exceeded 40M SF in 2021 and 2022.
Were there any talking points that you found particularly interesting or thought provoking?
The industrial market has also been shaken and impacted by the Capital markets. Over the last 18 months, the Fed has taken drastic measures that have impacted not only the cost of debt and equity, as returns have increased significantly for all types, but also the availability of equity. We are working with some very supportive regional banks now, but overall the environment is much different than what was encountered in recent past. Given the current environment we are navigating and operating within, very attractive investment opportunities do still exist today, but one has to look harder to find them. In my opinion, some of the best buying opportunities we may find as investors exist at the current time, given this disruption. If you have a functional asset, in the location/submarket you believe in, now is the time to invest.
What is the forecast for supply chain, distribution and logistics in Chicagoland/Illinois?
I think the future for Chicagoland in respect to supply chain, distribution and logistics is very positive. We have challenges, sure – but what place is perfect? The Chicagoland area maintains 1.3B square feet of industrial space and is, by most measures, the 2nd largest industrial market in the US. There is an incredibly strong base to operate and grow. We also have advantages when it comes to central location nationally, labor, fresh water supply, interstate highway system, O’Hare International Airport, significant rail infrastructure – intermodal yard and inland ports, among other positive factors. Some of the challenges we face at a micro/municipal level result in creating some element of land constraint in many mature infill submarkets; but that may have actually helped us in some respects to avoid becoming significantly over built or over supplied. Chicago does not face the current vacant supply of speculative and new construction to existing industrial base square footage ratio, that a market such as Indianapolis faces right now. I have worked with many clients who start a project with an intent to relocate and/or to expand a second operation outside of greater Chicago, and many retain or even grow their presence in Chicago, given the advantages and resources noted. It is harder to quantify – as the trucking market nationally and here locally is so fragmented but the amount of space (repair facilities and yards) that is required to support the trucks which move the volumes of freight in and out of the distribution buildings network – in Chicago and nationally still seems greatly underserved. In Chicago alone, in the past 5-6 years, more than 100M square feet of new distribution space has been developed and now houses value of goods and products that is hard to fathom. That is about a 9% increase in the industrial base of Chicago, yet the corresponding growth of assets to move those goods has NOT grown by 9% – because of constraints to supply. That creates great opportunity.
About NAI Hiffman:
NAI Hiffman is one of the largest independent commercial real estate services firms in the US, with a primary focus on metropolitan Chicago, and part of the NAI Global network. We provide institutional and private leasing, property management, tenant representation, capital markets, project services, research, and marketing services for owners and occupiers of commercial real estate. To meet our clients’ growing needs outside of our exclusive NAI Hiffman territory, we launched Hiffman National, our dedicated property solutions division, which provides property management, project services, and property accounting services across the country. NAI Hiffman | Hiffman National is an award winning company headquartered in suburban Chicago, with more than 250 employees strategically located throughout North America.
About Hiffman National:
Hiffman National is one of the US’s largest independent commercial real estate property management firms, providing institutional and private clients exceptional customized solutions for property management, project management, property accounting, lease administration, marketing, and research. The firm’s comprehensive property management platform and attentive approach to service contribute to successful life-long relationships and client satisfaction. As a nationally bestowed Top Workplace, and recognized CRE award winner, Hiffman National is headquartered in suburban Chicago, with more than 250 employees nationally and an additional six hub locations and 25 satellite offices across North America.