How Supply Chain Disruptions Could Transform CRE

Supply Chains Disturbances Have Far Reaching Impact

• Supply chain disruptions greatly increased shipping times and costs, impacting availability of materials
• Cuts into manufacturing outputs, construction and retail inventories
• Also raises costs of goods, further fueling inflation

Companies Taking Steps to Limit Impact of Disruptions

• Increasing order quantities and storing excess products in local warehouses provide small, short-term buffers
• Some manufacturers are reshoring, looking at facilities in the U.S., Mexico or Canada
• Higher costs of manufacturing locally offset by increasing automation and lower transport costs

The Ripple Effect on Commercial Real Estate

• Industrial facilities along U.S. ports of entry, like San Diego and San Antonio, have recorded record space demand
• Shorter and more secure supply chains benefit Retail, support local job creation and boost housing demand
• Investors should consider how these changes will shape markets, and capitalize with strategic investments

*Transit time for end-to-end ocean freight from China to the U.S.
Sources: Marcus & Millichap Research Services, Freightos

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