Page 7 - 2019 Colliers Forecast Book
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Colliers International | West Michigan  7

          Consumers Willing to Pay Extra for Delivery          Purchasing Managers Index
          Source: PwC, “Global Consumer Insights Survey 2018”  Source: Institute for Supply Management


            24%   23%          23%
                                                                 Index Rating  59

                                                  3%     2%

              ec  ec  ec  ec
           Specific  Less   Same   Next   2   3-5   1   More     57
           1-2 hour   than   day  day  days  business  week  than 1   Dec  Jan  Feb Mar Apr May Jun  Jul  Aug Sep  Oct Nov
           window 3 hours                    days       week

          the same time the labor pool is stretched thin. This shortage of  and affect Tier II and Tier III suppliers in West Michigan. In
          warehouse labor is raising the competition to retain employees,  addition, as GM and Ford shift their business models away
          with fi rms raising wages, as well as building warehouses  from the traditional automobile to  autonomous and electric
          with more amenities. Labor shortages will also increase the  vehicles, they have threatened to close a number of existing
          usage of automation in distribution in the coming years and  plants and eliminate more than 38,000 salaried jobs between
          developers will need to be cognizant of automation machinery  the two companies in order to restructure. Suppliers who have
          requirements when building new distribution centers.  preemptively adapted to this paradigm shift and have invested
                                                               in technology and skilled labor to provide new-age parts will
          The labor shortage isn’t limited to warehouse workers. As  have an advantage over those who haven’t. These shifts in the
          automation increasingly fi lls voids left by lack of basic labor,  automotive industry will likely have an impact on industrial real
          skilled labor to operate and maintain technology becomes  estate in West Michigan in 2019.
          necessary. Companies in other countries have launched dual-
          training programs, where the apprentice splits time between  With such low available inventory,  new construction has
          the classroom and the workplace. A number of organizations  increased, making the fi nancial numbers work a challenge
          in West Michigan have begun a serious push to educate the  for companies. Input prices continue to rise and have been
          next generation of workers about the opportunities available  impacted by international trade. Lack of construction workers
          and have initiated training programs prior to entering the  is creating a shortage of available contractors and sub-
          workforce. There is still a serious talent gap, however, that  contractors, which is driving up prices. New energy effi ciency
          needs to be addressed in order for manufacturers in the region  regulations are adding to the price-per-square-foot construction
          to grow.                                             cost. When looking at replacement costs, the sticker-shock
                                                               of new construction has been prohibitive to companies in
          A national theme, which will eventually trickle into the West  many cases. Companies are often times opting to make the
          Michigan market, is international trade. While the United  best of the space they have, move to whatever other space
          States/Mexico/Canada Agreement (USMCA) negotiation  they can make work, or in many instances, just add onto their
          is welcomed news, the escalating trade disputes between  existing building. Investment in automation rather than real
          the United States, China, and Europe remain a concerning  estate is also something that companies are doing in order
          headwind. Any growth in domestic manufacturing from the  to grow production without an increase in space demand.
          USMCA could be mitigated or even overtaken by increased  Any construction that does happen will likely be build-to-suit
          tariffs on products manufactured in the U.S. This could shift  for these reasons, rather than speculatively built. When new
          some foreign automaker manufacturing away from the U.S. to  construction does happen, a theme we have seen this year
          Asia, which could eventually make its way down the pipeline  and will likely see going forward, is building not only to fi t a
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