rents . With logistics companies facing significant margin compression and landlords slow to adjust to a softer rental market , the failure to renew current leases might make properties ineligible for logistics use . This , in turn , could push the next best commercial use to command lower prices .
CLDA Mag : Do you expect those in the logistics sector to do more renting or owning of their facilities in 2024 ?
Benko : That ’ s tough to say . It will continue to depend on many economic and governmental factors ( including inflation , federal and state policies , and resource availability ). These all play a role in facility demand and the decision to rent versus own .
Chin : Renting . It allows space users more flexibility to adapt to the demographic changes in their customer base . On the other hand , the economic slowdown could offer some space users the opportunity to secure a purchase in high-barrier-of-entry markets .
Louie : I forecast they will be renting more because of the perception that interest rates are too high to purchase . Purchasing / selling will pick up when both sides accept the reality that these higher rates are here to stay for a while .
Gonzalez : Yes , the cost of debt ( for both corporate and real estate products ) could push companies to weather the storm and lease instead of making acquisitions . Companies may also use creative facilities / real estate strategies to secure alternative financing . Or they may look to convertible lease structures like lease to own .
Additionally , municipalities are pushing back on logistics tenants in specific markets for two reasons : 1 ) The large amount of land committed to logistics versus housing , and 2 ) the emissions and traffic caused by freight transport coming in and out of logistics sites . For this reason , a company may want to purchase versus lease to lock in the use .
CLDA Mag : Will those in our sector be joining the national trend of downsizing their offices because of the trend towards remote work ? If so , how will this impact the office space they need ?
Benko : Logistics is different than some other businesses . This sector will not be able to significantly decrease office space just because of the type of workers they employ . Many logistics operations have an environment where being near operations , dispatch , and customer service is advantageous . And some workers , like drivers and warehouse associates , can ’ t work remotely .
Logistics is different than some other businesses . This sector will not be able to significantly decrease office space just because of the type of workers they employ .”
FALL 2023 I customized logistics & delivery Magazine 47