280,000 Workers Will Be Needed for Industrial Space Under Construction

Booming demand for warehouse space, bolstered by the record 423.7 million square feet of industrial property under completion this quarter, could lead to significant labor shortages in the near term.

A new report from Newmark estimates that more than 280,000 additional warehouse workers will be required to support activities within new facilities currently under construction—and notes that employees from other sectors are increasingly shifting to these types of jobs. That’s particularly true for the warehousing and transportation sector, where approximately half of current employees previously worked in retail/wholesale and administrative services. 

“This flow is likely to accelerate: recent national wage growth in those sectors lagged gains in warehouse and transportation wages, which grew by 4.25% from January to June 2021, a record 6-month gain for the sector,” the report notes. “Additionally, COVID-19 has had a significant impact on industry demand shifts and the subsequent reallocation of labor across sectors, illustrated in part by the widespread, temporary closure of non-essential retail while e-commerce activity soared. Retail re-hiring needs are difficult to forecast, but some of this labor reallocation to warehouse and transportation is likely to remain permanent.”

While warehousing and transportation employment has “nearly recovered” from COVID-era losses, attracting and retaining talent remains a challenge: “exploring concentrations of workers in industries other than warehouse and transportation with analogous barriers to entry and job contexts is key,” according to Newmark analysts, noting that other considerations include warehouse and transportation unemployment, and re-engaging employees who previously left the sector due to wage and benefit levels, working conditions, or COVID-related health concerns.

Another factor worth considering: the proximity of warehouse districts to public transportation. A lack of viable public transit options to access these industrial areas can severely limit recruitment, and the Newmark report notes that “communities, developers, and businesses all have an opportunity to leverage a shift in employment by partnering on public/mass transit opportunities, which are more environmentally conscious, reduce impact to public infrastructure, and create access to jobs with upward mobility in the wage stack.”

Warehouse demand continues to dominate the industrial sector,  with future demand volume driven by logistics and parcel delivery growth up 22% year-over-year in 2021, according to JLL. Requirements for manufacturing space rose 93% year-over-year.