Posted on January 26, 2016 · Posted in Industrial / Flex, Investments, Retail

Over the next decade, 20 markets worldwide—including South Florida; Santiago, Chile; El Bajío, Mexico; and Philadelphia—are set to emerge as global logistics hubs, according to a new report from CBRE Group Inc.

These emerging locations share a number of characteristics, including significant investments in infrastructure, new trade policies and agreements, and more advanced supply chains and technologies. (See infographic below.)


Since 1980, global trade has increased by nearly 600 percent, spurring the development of wider, more complex supply chains worldwide. To support this growth, logistics hubs connecting multiple transport modes have been established in virtually every country.

“International trade is a powerful stimulant to economic and business development and it is very dynamic in the longer term. Changes to infrastructure and regulations and the growth of new markets mean there is a continual need to drive efficiency through adjustment to supply chains,” says Richard Barkham, global chief economist for CBRE. “Logistics hubs are the main driving force behind the industrial real estate markets and are at the center of large clusters of distribution facilities.”


Infrastructure Investment

South Florida, the region that includes the Dante B. Fascell Port of Miami and Port Everglades (Fort Lauderdale), is a prime example of a longtime regional hub that is positioned to emerge as a global hub thanks, in large part, to investment in transportation infrastructure both locally and abroad. In response to the widening of the Panama Canal, which will increase the flow of post-Panamax container ships from Asia to the East Coast of the United States, South Florida has invested over $1 billion in projects that will upgrade the ability of both ports to handle larger ships. A significant portion of the investment has gone toward deepening the channel to allow for larger ships to pass through and upgrading the intermodal rail service, which will connect South Florida to 70 percent of the U.S. population in four days or less.


Trade Agreements

The Americas region has a vast collection of free trade agreements that began with the passage of the North American Free Trade Agreement (NAFTA) in 1994. These agreements have bolstered the already established regional leaders such as Brazil and Mexico, but they have also helped spur growth and globalization in smaller economies such as Chile, where Santiago, the primary logistics hub, is in the midst of a rapid transformation, from a small regional market to the main distribution location in western South America.

“Santiago’s growth from a strong regional player to a truly global hub will hinge upon the continued growth of the local economy and also the growth of the logistics real estate stock,” says Carla Lopez, Latin America head of research. “As of Q2 2015, the market was more than 96 percent occupied, presenting few quality opportunities for new entrants into the market and creating a bottleneck that may inhibit future growth into a global hub.”


Supply Chains

Over the past decades, automobile production for the U.S. market has steadily been moving south in search of lower-cost locations. The U.S. Southeast has been the beneficiary, but, increasingly, production is shifting south of the border to El Bajío, Mexico, where production costs are significantly cheaper than in the United States and Canada and where the supply chain is shorter and less risky than for units produced in Asia. Foreign investment into El Bajío, particularly from European and Japanese auto manufacturers, has spurred further investment in logistics and distribution real estate. With approximately 70 percent of auto production exported, El Bajío has become the major regional auto distribution hub.

“With production forecasted to grow, exports diversifying to Brazil and the Pacific Alliance countries, and growing foreign investment in the region, Bajío is a prime candidate for growth into a global hub,” says Lopez.



“The rapid growth of e-commerce has had an effect on inventory management, leading to disruptions in the global supply chain network—speed to market is more important than ever,” says David Egan, Americas head of industrial research for CBRE. “The technical ability of locations and buildings to support the ever-increasing demands for both scale and speed of output is an ever-more important determinant of market position.”

The eastern Pennsylvania region, anchored by Philadelphia and fueled by the growth of the Lehigh Valley, is an example of a hub that has been transformed by this new technology. This mid-Atlantic location offers access to more than 100 million people within a one-day drive, including key metropolitan areas such as New York, Boston, and Washington, D.C.

“Eastern Pennsylvania has easy access to the major East Coast ports in New Jersey, Pennsylvania, and Maryland, which, combined, handle the second-most TEU volume in the U.S., and an abundance of well-located land suitable for the extra-large distribution centers favored in the retail supply chain,” says Egan. “The market is the fastest growing in the U.S. and quickly becoming the main bulk distribution location in the eastern U.S.”

Click here to access the full CBRE report.


Source: UrbanLand

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