Wall Street Journal is reporting that CBRE is buying $4.9 billion of warehouse space from Hillwood. We are happy to see this transaction happy because it reaffirms our investment in ILPT which we wrote about back in November and again in December.
The world economy and supply chains are re-aligning and we predict there will be far more on-shoring and a return to inventory buildups to prevent future shortages and rationing. With the productive labor force shrinking in the US and China day by day, business-as-usual strategies won’t cut it in 2030 America.
NPR recently had a podcast describing how warehouses across America are filling up and there is a growing insatiable demand for more space. The driving force behind this phenomenon are consumers changing preference for online shopping/ordering and home delivery.
Recently, a warehouse in Virginia sold for a whopping $7.3 million and it only had 130000 in square feet! In Nashville, a Boston company paid $36 million for a warehouse near the airport!
Lastly, with so many warehouses full, can you guess what other problem has arisen? Labor shortages of course! Some warehouses are now offering $25/hr to $35/hr for warehouse workers. It is now possible to add warehouses to the list of deeper pockets that will draw workers away from fast food places, restaurants, dry cleaners, and other small businesses. Why wait tables for $2.13 or flip burgers for $15/hour when you can load and unload crates with a forklift for $35/hour?
The great thing about ILPT is that it is a REIT that will pay a dividend regardless of whether the warehouse lessor can find labor or not, the rent is due at the end of the month and so is the dividend payment.
Stay tuned and stay solvent.
Disclosure: One or more Econonaut member(s) holds positions in ILPT.