ElmTree Funds Releases Industrial Labor Trends Report

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Sep 27, 2022, 12:00 ET

Secondary and tertiary markets may represent the next frontier of growth in the industrial sector

ST. LOUIS, Sept. 27, 2022 /PRNewswire/ -- ElmTree Funds ("ElmTree"), a leading net lease real estate private equity firm, recently released a research report unveiling labor trends in the industrial real estate sector. The report, titled "Labor Scarcity is Reshaping the Industrial Landscape," details the demand drivers, sector growth data and emerging market opportunities in the industrial real estate market. ElmTree CEO & Founder James Koman made the announcement.

The report, spearheaded by ElmTree Managing Director MaCauley Studdard, who oversees the firm's underwriting and research department, leverages data from a range of credible industry sources, including the U.S. Census Bureau, the Bureau of Labor Statistics and CoStar. The ElmTree team examined demand drivers spurring the industrial industry's consistent and explosive growth, increases in warehouse employment, companies impacted by labor constraints and markets ElmTree believes are positioned for long-term growth.

"Significant growth in tenant demand for industrial real estate has created a shortage of the workers needed to effectively operate industrial facilities at a time when the vacancy rate for Class A industrial space is near an all-time low," stated Studdard. "Our research team has identified a subset of secondary and tertiary markets that offer higher labor availability and lower labor costs relative to larger gateway markets. ElmTree believes these markets are positioned for long-term growth and offer a compelling opportunity for investors with a mid-to-long-term investment horizon."

Key findings from the industrial labor trends report include:

According to CoStar, the vacancy rate for Class A specialized industrial space reached an all-time low as of August 2022, and the second quarter of 2022 saw all-time high net absorption of nearly 27 million square feet.
Warehouse employment has soared, increasing nearly 50% between 2019 and 2021. In addition, operators will need to hire an additional 140,000 warehouse employees in the next two years alone to commence operations on newly delivered facilities.
In what is already one of the most dynamic commercial real estate sectors, secondary and tertiary industrial markets may represent the next frontier of promising growth opportunities.
Companies impacted by labor constraints include Walmart, FedEx and Target.

In 2021, Walmart announced bonuses and wage increases for its warehouse employees to alleviate labor constraints.
In FedEx's first quarter of 2022 earnings release, the company cited rising labor costs as a major headwind to the company's operating results.
In March of this year, Target announced that it would raise its minimum wage to as high as $24 per hour in order to better compete for labor.

ElmTree releases timely reports on industrial real estate trends on a quarterly basis. The information provided in this report is effective August 2022. To access the complete report, click here.

About ElmTree Funds

ElmTree Funds, LLC, headquartered in St. Louis, Missouri, is a real estate private equity firm that manages capital on behalf of institutional and private investors. ElmTree's investment philosophy focuses on making strategic investments in the commercial real estate net-lease and build-to-suit sectors with a focus on industrial properties. Since its founding in 2011, ElmTree has acquired, developed, or financed an extensive portfolio of commercial real estate. ElmTree targets investments in primary and secondary markets across the U.S. that are net-leased to investment grade tenants on a long-term basis. To learn more, visit https://elmtreefunds.com/.

SOURCE ElmTree Funds