The global warehouse construction sector continues to face rising costs of constructing industrial space across global markets, driven by a combination of a high volume of projects, intense competition and a lack of contractor capacity, according to a Turner & Townsend report.
The study shows that supply chain friction and the increasing difficulty of obtaining labor and materials in 2021 has fueled above-average cost inflation, while providing an opportunity for supply chains to increase margins.
“The trend for re-shoring operations is gathering momentum, creating more regional and localized supply chains to provide businesses with greater levels of certainty and ‘what if’ resilience,” says Dan Robinson III, director, industrial and logistics at Turner & Townsend. “Increasing costs for warehouse construction has become an accepted normal as a result of heated investment in new logistics projects over the past decade. However, supply chain friction and the increasing difficulty of obtaining labor and materials in 2021 has fueled above-average cost inflation, while providing an opportunity for supply chains to increase margins.”
From Turner & Townsend:
- This year, Tokyo has taken the title as the most expensive location for logistics real estate. Much of Japan’s logistics infrastructure is in need of modernization and the current e-commerce boom is driving a need for new warehouse space.
- Hong Kong is now the second most expensive market as the city’s zero COVID-19 policy and tough quarantine rules have added to supply chain disruption at the port and airport for this highly import-dependent market.
- Dublin has been catapulted into the Top 3 most expensive locations after being ninth in the index in 2020. Delays, additional paperwork and extra costs created by Brexit have created a complex landscape for logistics projects in Ireland.
- U.S. port-side locations, including Long Beach, Oakland, and San Francisco, also rank in the Top 10, with excessive lead times a critical challenge.