Construction materials

All Eyes Are On the Global Supply Chain for 2022 Commercial Real Estate

Supply chain bottlenecks on both coasts have made headlines in recent months, particularly in Los Angeles and Long Beach, where container ships are often backed up for weeks waiting for cargo to be discharged. The real estate development and construction industry, which depends on materials and equipment from many other industries, remains especially hard hit.

Labor shortages and other issues may last well into 2022 and possibly 2023 due to pandemic-related problems around the globe. The long-term impacts on the U.S. industrial sector remain to be fully seen and may continue indefinitely.

The pandemic forced many manufacturers across the globe to shut down, then try to scale back production while working to provide healthier work environments and comply with ever-changing regulations. It also has rapidly changed economic demand for goods and services, as people had to isolate themselves at home and work remotely. This led to increased sales of new and existing homes and home renovations, causing a need for even more lumber, appliances and other building materials.

Global supply chain problems have served as an impetus for companies to want to keep more crucial inventory on hand, so that they have plenty of backstock in case of future supply chain issues. Experts say that trend, coupled with bringing more manufacturing to North America, will drive the increasing demand for industrial warehouse and distribution space across the U.S. for the next five years.

The industrial real estate market is currently experiencing a huge boom, according to a new report from Cushman & Wakefield, which noted that the third quarter of 2021 was a record-breaking one for the industry, with demand, rents and construction all on an upswing. The industrial real estate market remains tight and is growing tighter because demand is growing faster than supply.

By 2025, JLL predicts that an additional 1 billion square feet of industrial real estate will be needed owing to e-commerce, inventory growth and a resurgence in U.S. manufacturing. The current construction pipeline will be sufficient to meet more than half of this demand, but the industry will need to find suitable places to continue building, which is becoming increasingly challenging.

This is one of the strongest periods to date in real estate history. Builders are struggling to meet demand as the industry continues to soar, resulting in record-low vacancy rates and soaring rental rates. Due to all of these factors, industrial and commercial real estate are ideally positioned for continued growth for some time to come.

 

Project and finance perspectives deserve equal weight

Nearly all job costing software emphasizes the subcontractor or general contractor perspective where the detail level drives the reporting. But success in the developer market comes from its ability to go beyond the details and show management top-level project status and the various detail levels that support it. The software solution must address the complete life cycle of a real estate asset: from project inception to project completion, and from pre-development to property management, in order to minimize budget debt and maximize profit, efficiency and client satisfaction.

 

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