It’s no secret that the industrial real estate industry is booming. And experts are predicting the market might be hotter than last year with record-high pre-leasing prices and a continual shortage of inventory. The competition for industrial space in Southern California has also increased significantly over the previous year as availability consistently decreases.
From 2019 to 2022, there has been a massive 46% increase in leasing activity from distribution and logistics centers alone. Followed closely by 3PL, eCommerce retailers, construction, and food and beverage companies. As a result, industrial vacancies have also dropped below 4% in the area, for the first time in American history.
What does this mean for businesses with leases coming up?
Businesses in Southern California are feeling the pressure. With leases coming to an end in the next couple of years, it can be a stressful time with the uncertainty of the market. However, if you don’t (or cannot) renew your lease, you may face inflated prices and high competition for industrial real estate availability.
Why The Industrial Real Estate Shortage?
The industrial real estate shortage in SoCal is the result of several factors, including:
Economic Growth in the Area
The Southern California region has seen strong economic growth in recent years. This has led to more businesses moving into the area and competing for space.
Decrease in Industrial Inventory
There has been a decrease in the amount of available land in SoCal. Much of the land in Southern California is already being used for other purposes such as agriculture or recreation.
Lack of Construction is Leading to Industrial Real Estate Shortages
Construction costs have skyrocketed, and finding available building materials is challenging. Thus, it is difficult for developers in the area to build new industrial spaces.
How Are Businesses Adapting to Industrial Real Estate Shortages?
While some businesses are moving operations out of Southern California to less desirable locations or downsizing their operations, the competition is still high in almost every state in the U.S. With leases up in the coming years, you can expect to pay more for a new facility or find alternative ways to increase storage density in your current space and resign your lease.
Companies Are Going Vertical to Adapt & Save
Many manufacturing and distribution facilities are going vertical with their fulfillment operations. In some cases, this can double or triple the amount of storage space available without moving locations or changing your current layout. This saves businesses money in the long run, but it’s also a more efficient way to utilize existing space.
McMurray Stern’s Vertical Storage Solutions
McMurray Stern is a professional contractor specializing in the planning, designing, and implementing of storage solutions. Our fully integrated design-build process ensures projects are managed from concept to execution. Hence, you have an improved workflow and can manage your time, space, materials, and information more efficiently.
In addition, our automated storage and retrieval systems allow for a higher storage density, freeing up otherwise wasted floorspace and improving accuracy and speed of operations.
Vertical Life Modules (VLMs)
VLMs are an ideal storage solution for industrial products, components, and spare parts for all possible environments and industries. Many companies have chosen VLMs to help organize and improve their workflow, thanks to their flexibility, wide range of models available, superior design, and ease of use. VLMs have businesses reaching new heights and utilizing unused open space. The systems feature many benefits, including:
- Highly convenient goods-to-person principle
- The compact design has economic and environmental advantages
- Highest storage density for small parts, up to 90% less floor space
- Simple user guidance with minimal training requirements for operation
- Increased performance through automated processes and more outstanding ergonomics
Lift&Run
McMurray Stern’s automated Lift&Run is a highly dynamic and economic solution for pallet handling in the manufacturing and distribution market. Our Lift&Run solutions are designed for all warehouses, even those with little space that are seeking ways to increase material workflow while optimizing any current available space.
Contact McMurray Stern to learn more about how we’re helping Southern California businesses adapt to the industrial real estate shortage. We specialize in helping companies find automated, vertical storage solutions that work best for them.
What The Future Holds
Overall, it is difficult to say what the future holds for the industrial real estate market in SoCal. However, businesses will continue to feel the pressure as long as the shortage of available industrial inventory persists, and prices continue to rise. That’s why automated vertical storage options are becoming a more popular and realistic solution to resigning leases and optimizing current spaces.
