Dude, Where’s My Truck? Parking Shortage Pushing Up Price For Big Rig Real Estate
In the U.S., 18-wheeler big rigs are synonymous with commerce, barreling down the country’s interstate system to deliver goods of all shapes and sizes to stores or straight to buyers’ doors. But while everyone is familiar with these hulking haulers, their role as a demand driver for a class of commercial real estate is more covert.
The need for expanded and updated logistics infrastructure at our nation’s ports, airports and distribution centers has long fed demand for new warehouses. But the lack of spots is leading to a frenzy of interest and investment, especially in the wake of the growing industrial outdoor storage movement.
“Drivers need a place to park overnight when they’re on the road, or simply a place to park when they get home, and that’s a problem that just hasn’t been solved,” Cresa head of research Craig Van Pelt said. Cresa research estimates there’s just one parking spot for every 11 trucks in the United States.
In the last two years, national lease rates for truck parking have gone up 10% annually, Van Pelt said. That signaled a significant opportunity for investors.
But getting in the parking game isn't as easy as it sounds.
Factor in the increased price for industrial land due to warehouse construction — Van Pelt said there’s a record-high 600M SF of industrial under construction nationwide — and suddenly finding a place to park a truck in an already crowded real estate market becomes much more complicated. The shortage of truck parking was the third-biggest concern behind fuel prices and the driver shortage, according to a late 2022 national survey by the American Transportation Research Institute, a concern that only increases as next-day or one-day shipping expands.
Land costs do limit the construction of new parking, maintenance yards and storage for interstate trucking, as well as smaller vans handling last-mile delivery in urban areas.
But the supply and demand mismatch has been exacerbated by municipalities and local governments, which don’t particularly like the lower tax revenue and excess traffic these sites bring, and have enacted strict zoning regulations to prevent them.
“Municipalities don't want this in their backyard, but it's key to our economy, right, it's what keeps the world going,” said Dayton Street Partners founder and CEO Howard Wedren, whose firm invests in industrial outdoor storage properties. “Since these trucks and trailers need to be working, and there’s always going to be needs for these yards, this space became attractive to us due to its high-barrier-to-entry nature.”
The pandemic-era e-commerce boom has also seen the demand for trucking and shipping services skyrocket. Even with recent declines in consumer spending due to inflation and financial challenges, the need to move more goods remains elevated. Cresa estimates truck miles traveled are up roughly 10% from pre-Covid highs. And trucking scales much easier than rail.
Both the big players in the space and the numerous small, regional carriers are fighting with investors to find land. In early March, GreenPoint Partners, a New York-based venture capital firm that established a $500M truck and trailer industrial outdoor storage fund, announced a strategic investment in Semi-Stow, an Austin, Texas, based semitruck parking and trailer storage operator.
“Truck parking and trailer storage is a key component of the logistics and e-commerce value chain and a sector where innovation has historically been limited,” Chris Green, founder and CEO of GreenPoint, said in a statement.
There’s fierce competition for this real estate, said Eric Rose, a broker for Cresa in Omaha, Nebraska, who represents many of the nation’s largest carriers. There are slightly different strategies; larger carriers want spaces to diversify their business and improve their shipping networks, while investors, who tend to move much faster, are simply looking to add real estate to their portfolios.
And looking forward, even if expected technological advances in autonomous and heavy-duty electric vehicles take hold, there will always be a need for parking. Van Pelt expects new regulation in places like Southern California, which is pushing for more electrification of heavy trucks, will create new demand and investment opportunities in expanding and adding more parking spaces with chargers and the right infrastructure.
Read the full article in BisNow.
View Cresa's 2023 Frieght Transportation Report.