Industrial real estate shifts inland as power grid constraints dictate future hub locations

By Katie Ann McCarver
Las Vegas Sun / Vegas Inc
Aug. 31 https://vegasinc.lasvegassun.com/business/2026/aug/31/companies-swap-just-in-time-inventory-for-regional/

Commercial real estate is being reshaped by a fundamental shift in how companies manage inventory
— moving away from just-in-time (JIT) methodology, with minimal stock on hand, toward just-in-case
(JIC), the amassing of “safety stock” to buffer against supply disruption.

“Disruption is the new baseline,” said Ruben Ramirez, head of occupier services for the Americas
Industrial & Logistics division at CBRE, a commercial real estate services firm headquartered in
Dallas. “It’s not the exception anymore. So you’ve got to plan for disruption.”

Ramirez and John Kirkman, managing senior director and supply chain advisory leader at CBRE, laid
out the shift during a panel discussion, “Navigating the Modern Supply Chain,” hosted by CREDA,
the Commercial Real Estate Development Association, Southern Nevada chapter, on Aug. 20 at
The Orleans in Las Vegas. Hundreds of local commercial real estate players, UNLV students and other
stakeholders attended.

“Supply chain’s happening. Real estate’s happening,” Ramirez said. “Are the conversations happening
together?”
He pointed to disruptions including trade volatility and tariff instability, global shocks like the COVID19 pandemic, port congestion, shipping delays, closure of the Strait of Hormuz and inflationary pressures as drivers of the shift.

A JIT supply chain is typically more about managing cost than unlocking revenue, and tends toward
real estate that is port-proximate and in import gateways. That’s changing, Kirkman said.
“Just-in-case inventory places inventory closer to consumption,” he said, naming midcontinent markets
like Columbus, Ohio, Kansas City, Mo., or Dallas as beneficiaries. “We’re seeing the center of the U.S.
emerge as epicenters and hubs.”
Companies are moving from one or two large coastal or inland hubs, Kirkman said, to three or four
regional hubs.

Year-to-date, port-proximate warehouse absorption — the rate at which warehouse space gets rented or
sold — has hit a 15-year low, Ramirez said. In 2021-22, by contrast, 500 million square feet were
added to net new industrial demand because of the pandemic.
“That absorption wasn’t about e-commerce,” Ramirez said. “It was about inventories. It was about that
safety stock. It was about that shift to just-in-case — that was where that demand was coming from.
And we’re seeing a shift to that again, as more companies are, again, planning for that disruption.”

JIC is “buffer heavy,” meaning it’s built to manage swings in marketplace demand, Kirkman said.
Compared to a JIT scenario, distribution centers in a JIC supply chain are adding 15 to 25% more
square footage for the same throughput, among other changes.
Third-party logistics companies are increasingly a huge swath of industrial leasing, Ramirez said,
largely because other businesses use them to test liability in new markets and automation.
The risk of a JIT supply chain is its lack of buffer when the network is disrupted, Kirkman said —
“you’re exposed.” In JIC, the primary risk is cost.
“There’s always a healthy tension between service and cost in the supply-chain world,” he said. “When
we think about just-in-case inventory, your cost increases dramatically from an inventory-holding
position.”

Most companies sit somewhere between the two models, Kirkman said, though the center of gravity is
veering toward JIC.
Kirkman outlined the key variables companies weigh: throughput, or how much a company wants to
process each day; the scope of products and their storage; safety stock; and how many pallet positions
exist relative to the days of safety stock needed.
Safety stock — how much excess product a business has, and how many days it can last before its next
inbound shipment — is the variable most affected by what Kirkman called the “disruption decade.”
“Buffer stock protects revenue,” he said. “The biggest winners during COVID were those that had
excess inventory — poor inventory positions, comparatively, for just-in-case — but had the inventory
on hand. It really is protecting your revenue function; making sure that, as disruption events happen,
you’ve got the inventory on hand, whether it be parts, whether it be finished goods or the
manufacturing products.”

These shifts have also reset the baseline for building specifications, with a need for three to five times
higher power density, 36-foot clear heights and smart building infrastructure like fiber and edge
compute, according to the presentation. Retrofitting existing properties to meet that standard is difficult,
Kirkman said.
“It’s not just slapping lipstick on,” Ramirez said. “It’s major surgery.”

On site selection, the two discussed new criteria — water access governance, term flexibility and more
— layered onto existing needs like transportation infrastructure and labor availability.
Power is becoming a primary constraint, per the presentation, driven by tariffs, emergency orders, data
centers and interconnection queues increasingly controlled by private equity — which, Kirkman said,
“certainly don’t have Joe Consumer’s best interests at heart.”
“No longer is it, ‘Let’s look at the transportation cycle, labor and then incentives,’” Kirkman said. “It’s
now saying, ‘OK, how much power do you need? Where in the country is there power?’ And then
evaluate the efficacy of it as a supply chain hub after that, which is kind of flipping the conversation on
its head.”

He also pointed to growing automation, with companies closing distribution centers in one area to open
automated facilities elsewhere.
Site selection used to hinge on having people to pack boxes, Kirkman said; now it’s about having
technicians who can work with the technology. Fewer employees doesn’t mean lower cost, he added,
since those technicians tend to be paid more than the packing jobs they replace.
“The tension there is, we’re wildly understaffed for a technical workforce,” Kirkman said. “These
private companies are shopping around on their own to teach up these folks, but there’s just a mass
skills trade shortage in the United States today.