Slowdown in Warehouse Construction Could Extend Shortfall of Space, Experts Say

The tight squeeze on warehouse space looks like continuing, despite a drop in consumer demand, says The Wall Street Journal. Construction of new industrial facilities declined sharply at the end of last year, presaging a continued shortfall in capacity at distribution centers that has helped boost logistics property prices. 

The 24% slide in industrial construction starts in the fourth quarter of 2022 compared with the same period a year earlier, measured by CoStar Group, is part of a broader contraction in capacity across supply chains—a response to declining orders and inventory retrenchment by shippers. 

Retailers have slowed their leasing as the pandemic-driven surge in online shopping has ebbed, and consumer spending is wavering. Experts say the long lead times on warehouse development mean the pullback will take time to work through markets. 

Meanwhile, developers are being pickier about starting projects. Vacancy rates are ticking up, but the increases have been slim, and space in big markets remains scarce.

Source: https://www.supplychainbrain.com/articles/36554-slowdown-in-warehouse-construction-could-extend-shortfall-of-space-experts-say

Source: https://webfulnet.com/

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