Latest / Industrial Advisors / Embracing VUCA: The New Normal in Industrial Real Estate

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Embracing VUCA: The New Normal in Industrial Real Estate · Industrial Advisors

• 0:00
  Looking back on the last five years starting with Covid, I think it's
• 0:04
  safe to say that we have been living in a world of constant disruption.
• 0:08
  Covid was that big macro environmental force that hit us.
• 0:11
  Yes,
• 0:11
  totally knocked every aspect of our lives and our industry.
• 0:15
  Kind of outta whack.
• 0:16
  And since then, it, it really hasn't returned to what used to be our normal.
• 0:22
  Mm-hmm.
• 0:22
  But yet we keep, you know, kind of talking about, oh, after the first
• 0:26
  vaccine rolls out, it'll return to normal.
• 0:27
  Or, oh, after the Russia, Ukraine war is over, things will return to normal.
• 0:33
  Or after the election, it will return to normal.
• 0:35
  And
• 0:36
  it
• 0:36
  still doesn't, it's still, we're still experiencing all of the vuca,
• 0:39
  the volatility, the uncertainty, the complexity, the ambiguity.
• 0:57
  Welcome to our Industrial Advisors podcast.
• 1:00
  We're live at IMC in Sacramento.
• 1:03
  I have Bill and Matt, and we have Jody Poirier, who is our.
• 1:07
  President of occupier services and absolutely just crushed the
• 1:12
  keynote presentation here at IAMC.
• 1:15
  You did an awesome job.
• 1:16
  Nice job.
• 1:16
  Thank you.
• 1:17
  Thank you.
• 1:17
  Really, really good.
• 1:18
  And, uh, it was all about embracing change.
• 1:20
  So we're gonna talk a little bit about it, but how do you feel now that you just
• 1:23
  crushed a. Epic, uh, keynote presentation.
• 1:26
  I feel great.
• 1:27
  That was really fun to be up in front of you all, and it was really fun to put
• 1:32
  it all together and really got my brain thinking about change and how we best
• 1:36
  navigate a strategy amongst all of the vuca that love that we're experiencing.
• 1:41
  Yeah.
• 1:41
  Yes.
• 1:42
  And I was gonna ask you, but you'd said it later, so I, I know
• 1:44
  you already had that in there.
• 1:46
  Yes.
• 1:46
  But what a coincidence for the listener.
• 1:48
  The first keynote speaker mentioned that right?
• 1:50
  Acronym Navy Seal.
• 1:51
  Yeah.
• 1:52
  Yeah, the Navy Seal.
• 1:52
  And then you brought it in.
• 1:53
  I was like.
• 1:54
  How did she get that in there?
• 1:55
  That quick?
• 1:56
  I
• 1:56
  literally thought
• 1:56
  that.
• 1:56
  Oh,
• 1:56
  really funny.
• 1:57
  I mean, she called, so that was brilliant.
• 1:58
  Well, if you were part of the, the Friday prep session Yes.
• 2:02
  I would've known.
• 2:03
  You would've known Neil.
• 2:04
  Yeah, exactly.
• 2:04
  Exactly.
• 2:05
  But you were part of it.
• 2:06
  Bill was so much better at critiquing.
• 2:07
  See?
• 2:08
  Yeah.
• 2:08
  And she, look how well she did.
• 2:09
  Yeah.
• 2:11
  It's all me.
• 2:12
  So yeah.
• 2:13
  So embracing change, that was awesome.
• 2:15
  So talk to us about, so obviously this industrial conference
• 2:18
  you just covered change.
• 2:19
  Tell us a little bit about that and what you covered today.
• 2:22
  So looking back on the last five years, starting with COVID, I think it's
• 2:27
  safe to say that we have been living in a world of constant disruption.
• 2:31
  Covid was that big macro environmental force that hit us.
• 2:34
  Yes,
• 2:35
  totally knocked every aspect of our lives and our industry.
• 2:39
  Kind of outta whack.
• 2:40
  And since then, it, it really hasn't returned to what used to be our normal.
• 2:45
  Mm-hmm.
• 2:46
  But yet we keep, you know, kind of talking about, oh, after the first
• 2:49
  vaccine rolls out, it'll return to normal.
• 2:51
  Or, oh, after the Russia, Ukraine war is over, things will return to normal.
• 2:56
  Or after the election it will return to normal.
• 2:58
  And
• 3:00
  it
• 3:00
  still doesn't, it's still, we're still experiencing all of the vuca,
• 3:03
  the volatility, the uncertainty, the.
• 3:05
  Complexity, the ambiguity.
• 3:06
  So my thesis in all of this was, okay, this is the new normal vuca.
• 3:11
  This world of constant change.
• 3:12
  Uncertainty is our new normal.
• 3:14
  So we just have to get used to it.
• 3:15
  Yes.
• 3:15
  Embrace it.
• 3:16
  And we embrace, we don't know, embrace it.
• 3:17
  We don't know what's going to come down next down the pike, but we know
• 3:21
  it's gonna be some sort of change.
• 3:22
  Most likely that will disrupt us in some way.
• 3:25
  That's right.
• 3:26
  So how do we best navigate that?
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  And as leaders in our business, in this case, in industrial real estate,
• 3:31
  how do we navigate that change and set forth a strategy when we
• 3:35
  don't know what's going to change?
• 3:36
  And that's where I just coincidentally, a couple months ago,
• 3:39
  I ran into that Jeff Bezos video.
• 3:41
  Yeah, that was good.
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  That was a great video.
• 3:42
  Yeah.
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  Where he says, and it's just so interesting, it was only one minute long.
• 3:45
  And he says, you, gosh, the question I get asked all the time is.
• 3:48
  What's gonna change in the next 10 years?
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  And he said, what question I never get, but people should be
• 3:52
  thinking about is what's not going to change in the next 10 years.
• 3:55
  That's right.
• 3:55
  And he gives a great examples of, well, I know at Amazon people aren't
• 3:58
  gonna say, well, I want stuff delivered to me slower, or I want things
• 4:02
  that are gonna be more expensive.
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  And so looking at the future, in this case of industrial real estate, what do we
• 4:09
  know is not going to change in the next.
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  10 years and then use that as the pillars around which to build a strategy.
• 4:18
  That's right.
• 4:18
  And one And those
• 4:19
  five.
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  Were you paying attention?
• 4:20
  Can we Well, I
• 4:21
  do know the one that shocked me the most.
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  Power was power.
• 4:24
  Yeah.
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  Because I ranked that I think the lowest.
• 4:27
  Mm-hmm.
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  Right.
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  And it was ended up number two, and I'm like right behind location.
• 4:30
  That's insane.
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  Location, location, location.
• 4:33
  Yes.
• 4:33
  Okay.
• 4:34
  Power, power.
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  Technology, labor.
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  Mm-hmm.
• 4:37
  Ann,
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  hold on.
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  Match needs to give one.
• 4:39
  I mean, come on, I gotta, you got three in this.
• 4:40
  Come on.
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  Supply chain.
• 4:42
  Come on man.
• 4:43
  Like everybody knew that like,
• 4:48
  so those are the five pillar.
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  And then how is supply chain so low?
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  How is supply
• 4:51
  chain so low in terms of how people ranked it?
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  I think you're not gonna be worried about
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  the power if you don't have any supply, but I
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  think it's what location is so intricate.
• 4:58
  Yeah.
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  Connected to supply chain.
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  Had I not had location in there, I think supply chain would've
• 5:02
  been probably number one.
• 5:03
  Yes.
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  Also,
• 5:04
  we're talking about the rankings from,
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  from just the audience.
• 5:06
  From the
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  audience,
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  but, but very sophisticated match ranking.
• 5:09
  Yeah.
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  I was
• 5:10
  gonna
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  say a very sophisticated audience.
• 5:11
  Yeah.
• 5:12
  If we were ranked, if we would've ranked supply chain higher.
• 5:14
  Yes.
• 5:15
  I think I ranked it number two.
• 5:16
  I would've ranked it number two as well.
• 5:18
  Yeah.
• 5:18
  Look at that.
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  I think they would've had the same, but some
• 5:19
  of them go together.
• 5:21
  Location, location, labor, supply chain, you know, supply.
• 5:24
  Yes.
• 5:24
  Well,
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  that's the thing.
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  They're so interconnected.
• 5:26
  Yeah, totally.
• 5:26
  Yeah.
• 5:27
  Yes.
• 5:27
  Yeah, so, and I was surprised like.
• 5:29
  Okay.
• 5:30
  You, you said it a couple times, it powers the new labor.
• 5:33
  Mm-hmm.
• 5:33
  Brett.
• 5:33
  Brett, I guess said that.
• 5:34
  Yep.
• 5:34
  And that's interesting because with all of this, and, and your statistics
• 5:38
  were interesting with the on Onshoring.
• 5:40
  Mm-hmm.
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  Mostly from Asia.
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  We don't have labor here.
• 5:43
  Like why isn't that the concern?
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  We didn't have labor before all of this change.
• 5:47
  Right.
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  And now.
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  Where are you getting it?
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  So labor, labor is still up there on that, on that ranking of the
• 5:53
  National Association of Manufacturers.
• 5:55
  It still was in their top seven.
• 5:57
  Yeah.
• 5:58
  Yeah.
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  In terms of being a major concern.
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  But power was above that,
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  right?
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  Mm-hmm.
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  Part of that is because of automation.
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  Sure.
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  So with automation, good point.
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  That is taking the place of a lot of that need for labor and the
• 6:09
  outlook is even more so Mickey, and
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  with automation you need power,
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  and with automation you need power, you need less labor, you
• 6:16
  need different kind of labor.
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  But also less labor.
• 6:19
  Yes.
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  And McKinsey, actually, I think I forgot this little tidbit of a stat,
• 6:22
  uh, that I meant to, to mention today, but McKinsey had some research recently
• 6:26
  come out where they estimate that 30% of the current workload out there in,
• 6:32
  in warehouse and manufacturing will be replaced by automation, uh, by 2030.
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  Yes.
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  So the next five years.
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  30 up to 30% they're estimating will be replaced by automation.
• 6:41
  Well, you showed
• 6:42
  the one dark warehouse.
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  Yeah, the dark warehouse, which is in China.
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  China.
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  Mm-hmm.
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  And big facility that was totally dark.
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  Totally dark.
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  Runs 24 7 and has little to no human interaction and is all AI driven Robotics.
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  They're just cranking.
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  No lights needed, no
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  lights needed, no humans.
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  Yeah, no need for breaks.
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  Just 100% go, go go
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  crazy.
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  Mm-hmm.
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  So, and that may be, I position that that could be our future.
• 7:09
  Given again, that other graph that I showed data centers.
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  The US No, the US investment.
• 7:15
  Over through 2033, we are going to be investing, uh, well
• 7:19
  over 80 billion in automation.
• 7:21
  Yes.
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  So we're at 26 billion today, and estimates in the next five to eight years
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  are, it's gonna go to around 85 billion.
• 7:29
  So all this onshoring is just not requiring the labor at once did, and so
• 7:34
  correct.
• 7:34
  Less, but it's still a, still a, it's still a, a huge yeah factor.
• 7:38
  It's still of great concern.
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  So not to, not to diminish labor needs and labor concerns in terms
• 7:43
  of availability and all of that.
• 7:44
  That's still of great concern, but.
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  Less so given the power needs and just kind of, it's starting
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  to shift where power is becoming a greater concern than labor.
• 7:54
  That's right.
• 7:55
  Yeah.
• 7:55
  Well, and one of the, I mean, one of the, the reasons you are so good at this
• 7:58
  job is you're very client facing, right?
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  On the occupier side.
• 8:01
  So I imagine when you're interacting with our clients.
• 8:04
  Labor still comes up a lot when you're talking to 'em as like
• 8:07
  a, a real pain point for them.
• 8:09
  Absolutely.
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  It's a pain point and so that's what I, I don't wanna diminish it as it's,
• 8:12
  oh, no one cares about labor anymore.
• 8:13
  Yeah, they absolutely do.
• 8:15
  It's just there is, I have seen anecdotally, and a lot of the data
• 8:18
  supports this too, that power is just becoming more of a concern.
• 8:23
  One, because of the needs in terms of data center, in terms of the automation.
• 8:28
  The ai, all of that, the semiconductor fabrication, all of that requires much
• 8:33
  more labor than just your standard warehouse or standard, you know,
• 8:37
  making a widget of a, of an industrial facility manufacturing facility.
• 8:41
  Yeah.
• 8:41
  So that requires a lot more, and our infrastructure is not
• 8:43
  currently built to support it.
• 8:45
  That's right.
• 8:45
  So, okay.
• 8:46
  So I've got a deep thought for you from a brokerage perspective.
• 8:50
  Mm-hmm.
• 8:50
  Outta everything you've talked about, change all your rankings, your
• 8:54
  five rankings, your five pillars of industrial for industrial brokers,
• 8:58
  and a lot of people that listen to this show are industrial brokers.
• 9:00
  Uhhuh, what would you say over the next five or 10 years is a skill
• 9:04
  that needs enhancing or something that broker should spend a lot of
• 9:07
  time off that they can differentiate themselves related with those pillars.
• 9:13
  Mm-hmm.
• 9:14
  If you can
• 9:14
  think of one.
• 9:14
  Yeah.
• 9:14
  Oh.
• 9:14
  Back to power.
• 9:15
  Yeah.
• 9:16
  Yeah.
• 9:16
  I
• 9:16
  think becoming very well versed, not just on power that's required on site mm-hmm.
• 9:22
  But also what that means in terms of transmission, because that's, that's
• 9:25
  really where the major pain points are, even if the, the developer or the current
• 9:30
  site or developer of site to be developed.
• 9:32
  Has the power ability, you know, the p the ability at that current site
• 9:36
  to, to get the power, to have the power distributed to the, the user.
• 9:41
  It's getting the transmission from the actual, wherever it's
• 9:45
  coming from to that specific site.
• 9:47
  So even if they have all the fanciest transformer and load in the world,
• 9:50
  it's getting the transmission.
• 9:52
  Yes.
• 9:52
  So knowing that in your whatever community market that you work.
• 9:56
  What is that?
• 9:57
  What is the future of the grid?
• 9:58
  What know kind of the ins and outs of how to read the various, I don't even
• 10:02
  know what they would be called 'cause I'm, I'm not one of your experts in
• 10:05
  this, but from a, a power standpoint.
• 10:07
  Yeah.
• 10:07
  You know, looking at a development plan, being able to read that and say, okay,
• 10:10
  this pad, this transformer, this is what maybe Kern is, this is given the size,
• 10:15
  what it could accommodate for an upgrade.
• 10:17
  Mm-hmm.
• 10:17
  Being able to read through and think through all of that
• 10:20
  and have those conversations.
• 10:22
  And also have the conversations with users where they say, oh, I need,
• 10:26
  you know, such and such power, or I need a whole, you know, whatever the
• 10:29
  megawatt gigawatt is that they may need.
• 10:31
  It's like, okay, is that because you have X number of coffee pots plugged in?
• 10:36
  Or is it how many you are turning on?
• 10:38
  'cause there's a difference.
• 10:39
  That's right.
• 10:39
  If you're not turning on all those coffee pots, you don't need the amount that
• 10:43
  it has once to be plugged in all at.
• 10:44
  Yes.
• 10:44
  So there's a difference there.
• 10:45
  So it's understanding the nuances and also asking the additional
• 10:48
  questions to your client, to your occupier, your tenant client.
• 10:51
  Okay.
• 10:52
  This number you gave me, is that plugged in or is that turned on at one time?
• 10:55
  Yes.
• 10:56
  And you need to un understand what they need to turn on all at one time.
• 10:59
  'cause that's a different number than everything that's gonna be plugged in.
• 11:01
  So the nuances of power, I would say get number one.
• 11:04
  Really smart about that.
• 11:05
  Number one, you're that industrial brokers.
• 11:06
  Yes.
• 11:07
  Uh, shifting office real quick, 'cause you mentioned, uh, you did told a
• 11:10
  great story about the pandemic and.
• 11:12
  And change.
• 11:13
  Mm-hmm.
• 11:13
  And how that hit us.
• 11:14
  So Colliers just called everybody back to the office.
• 11:17
  Mm-hmm.
• 11:18
  Full time.
• 11:19
  Obviously that's been going on the last, I would say year.
• 11:21
  Amazon did it, Tesla did it.
• 11:23
  How do you see the next couple years of office, uh, related with that?
• 11:27
  Yeah.
• 11:27
  And maybe hit us with what change in office environment is happening with that
• 11:32
  smaller footprints or what's happening.
• 11:34
  Yeah, so we have seen, I mean, even the US government has announced
• 11:37
  both at state and different federal levels, a return to office.
• 11:40
  So whether it's private industry, public industry, Colliers is an industry, we're
• 11:45
  all 100% five days a week back in the office, which I think is a, a great
• 11:49
  thing in terms of, this is where, so do i, real knowledge transmission happens.
• 11:54
  It's very hard to, to have that happen over Zoom if
• 11:57
  you're, you're there every day.
• 11:58
  Not in the office having that, that face-to-face.
• 12:01
  That's right.
• 12:01
  So,
• 12:01
  uh, just my own personal opinion there.
• 12:03
  I think it's a great thing, but how is that changing?
• 12:05
  I think we're gonna see more and more of that as time goes on.
• 12:08
  The companies that haven't, I think we're, there's certainly gonna
• 12:10
  be more and more a drive to that.
• 12:12
  Some may still have the flexible where, hey, we want you in
• 12:15
  two to three days a week.
• 12:16
  It'll be that hybrid.
• 12:17
  I, I still think that hybrid will last and be a lasting trend, but
• 12:22
  I think it will be much more.
• 12:25
  We'll see much more kind of start to the pendulum sway to the other side
• 12:28
  of more days in the office than not in terms of what that's doing to the space
• 12:33
  itself, it's the office is becoming much more about that collaboration space and
• 12:39
  having that various, you know, whether it's breakout rooms, conference rooms,
• 12:43
  to be able to have more team interaction because those companies that are, are
• 12:47
  demanding, whether it's, you know, three days a week or five days a week.
• 12:50
  People are coming to the office to have that face-to-face, you know, team
• 12:53
  meeting, huddle, whatever it may be.
• 12:56
  So more spaces where that can take place.
• 12:58
  In addition to now, more of where I'd say pre pandemic, it was Oh,
• 13:02
  open benching all open office.
• 13:04
  Yeah.
• 13:04
  Now it's.
• 13:05
  Everyone's still on Zoom because as just as we are in our business, so
• 13:09
  many people that we're dealing with are not in the same city as we are.
• 13:12
  They're in different states and different countries in many cases.
• 13:15
  So we're on Zoom all the time.
• 13:16
  It's very hard to have a Zoom.
• 13:17
  It bill's right here next to me on his own Zoom.
• 13:20
  So we need more private space to be able to be on Zoom or else
• 13:23
  it's super distracting Sound.
• 13:24
  Tenuation is also becoming an even hotter topic for this very reason.
• 13:28
  So more now.
• 13:30
  Private areas or private offices, whether it's just to pop into or more dedicated
• 13:34
  private offices, because of that sound tenuation and how to deal with that
• 13:38
  is becoming a much hotter, uh, issue.
• 13:40
  So.
• 13:41
  Yeah.
• 13:42
  Collaboration space, sound, tenuation, more private space, which then also more
• 13:46
  private space increases the footprint.
• 13:48
  Yeah, that's right.
• 13:48
  So while, while companies have been downsizing, now it's many companies
• 13:52
  such as Amazon that have called back all their employees to the office.
• 13:56
  There's been, you know, I've, I've read just anecdotally in various
• 13:59
  articles, they've come back and people have had nowhere to sit because they
• 14:02
  downsized so much during the, these pandemic years that now it's, whoops.
• 14:06
  We're not actually ready to accommodate this full return to the office.
• 14:09
  So now it's kind of swinging the other way.
• 14:11
  So I think the next few years we're gonna see it finally start
• 14:14
  to kind of tick up where Agreed.
• 14:16
  It's been agreed.
• 14:16
  Definitely it's been ticking down for the most part.
• 14:19
  Yeah, I mean, it's
• 14:19
  been rough, but if you look at current state of the big cities, like look at
• 14:24
  Seattle, Chicago, San Francisco, New York.
• 14:27
  Much more vibrant today than it was 12 months ago.
• 14:30
  Yes.
• 14:30
  Significantly more.
• 14:31
  And we all know the office world impacts every, like
• 14:33
  there's more retail that mm-hmm.
• 14:35
  That takes place when the people are in the, when people are in the
• 14:37
  office, multifamily is impacted.
• 14:39
  Right.
• 14:40
  So it's nice to see, I mean, we still have a ways to go on the
• 14:43
  office side, but much more momentum than where we were 12 months ago.
• 14:47
  Absolutely.
• 14:47
  Noticeably so.
• 14:48
  Yeah.
• 14:48
  And it's just
• 14:49
  nice when you see in these cities.
• 14:51
  So much more activity life.
• 14:53
  Yes.
• 14:53
  Yeah.
• 14:53
  And it's, you know, it's a pain in the ass for traffic, but
• 14:56
  like, we'll live with that.
• 14:57
  Right.
• 14:57
  Like it's a good thing.
• 14:58
  Yeah.
• 14:58
  We'll take that.
• 14:58
  So, well, you did a really outstanding job.
• 15:01
  Um, thank you.
• 15:02
  We're really excited to have you leading the occupier services
• 15:05
  platform as well for us.
• 15:07
  You take a great partnership model with brokers and so looking
• 15:10
  forward to, to great things.
• 15:11
  Thank you.
• 15:12
  Thank you both for your support.
• 15:13
  Thank you very much.
• 15:14
  Great having you on the show.
• 15:15
  Thank you.