CEO Insight: ARCO's Dan Croft on industrial construction
As the first quarter begins, Croft said the industry is still facing significant supply chain problems, sometimes forcing him to scour the internet for needed materials.
Industrial is a sector to watch in 2023. Inventory is low and demand is high as larger companies continue to show interest in Jacksonville, where tenants decide if the space they have is adequate amid high interest rates and construction material costs. Being a design build firm, it helped how we could reduce and control the schedule of some materials. In some cases, we're seeing costs go down. At any time, some issue arises and there's some new crisis. Our current thing now is simple electrical meter cans that none of the electrical houses have in stock. We're having to scour the internet and go on eBay for some stuff. Electrical gear and transformers are backlogged as well. These are critical things. No one has answers about when that's going to be alleviated. Concrete is high going into 2023, so it's always something. Land costs were at historical highs. It's difficult for anyone to pencil in projects like speculative industrial building projects. A lot of them are paused until people see what happens in the next three to six months. The challenge is getting the deals to be able to work. (ARCO has) a healthy backlog heading into 2023. Our revenues have doubled year over year since we came to Jacksonville. It comes at the price of a ton of work and a team willing to take on that work. On the tenant side for people who need space, space is coming on the market, but not much of anything hits the market vacant. It's harder now, but we have potential clients interested in deals, and with the tenant demand, it's still a desirable market for a lot of folks, with the interstate, the port and the room to grow.