The industrial sector has long been the darling of investors, posting the strongest returns and attracting the most capital over the past few years. There is no reason to believe this leadership role will end soon, but some forecasters see concerning clouds on the horizon in the form of 3D printing. If manufacturers and store owners can use 3D printers to produce just-in-time products for consumers, will we still need large warehouses to store generic products?
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U.S. industrial developers were on track to overbuild 90M SF more a year than will be leased by companies, leading to occupancy dropping to 94% over the next three years. (Green Street)
in 2021, the 3D printing sector reached $10.6 billion in revenue, excluding the revenues associated with hardware maintenance contracts and post-processing equipment, and is expected to grow to over $50 billion by 2030. (SmarTech Analysis)
87% of companies expect their use of 3D printing to at least double, and nearly 40% expect their usage to increase five times or more in the next two to five years. (Jabil)
Retail stores, such as Target and the Gap, are finding themselves awash in inventory that was ordered to meet Covid demand but is no longer needed. The air fryer had the life span of a pet rock. Hoodies and loungewear are being replaced by business casual. If retailers could find a way to avoid the need to guess what will be trendy six months from now, it would decrease excess inventory and increase profits.
3D printing might hold the answer. The technology is well suited for low-volume and customized products, such as replacement parts. Auto manufacturers have already begun using the technology for specialized parts. The fashion industry is envisioning a day when a consumers could print a custom-fitted outfit for the day, melt it down when tired of it, and print a new one. No inventory needed.
“Warehouses” would no longer consist of big ugly sheds filled with tangible products. Instead, they would be data locations in the cloud, where customizable 3D plans could be accessed and downloaded in seconds. So, what would we do with those obsolete warehouses? Tech entrepreneurs are eyeing them as locations for incubator parks. Others believe they could become data centers. Still others note that some goods will always need to be stored before they move to a last-mile distribution center. But all see the first signs that the industrial growth that has characterized the recent investment horizon might be coming to an end. The question seems to be, not if, but when.