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Posts tagged "overseas"

Home» Posts tagged "overseas"

COVID-19 Prompts Manufacturing Companies to Make Long-Term Changes

Posted on October 28, 2020 by Mike Kushner in Blog, Commercial Real Estate, Industrial, Trends No Comments

According to a new study, more than 90% of companies expect the disruption of global supply chains caused by the pandemic to have long-term effects on their businesses. This has caused manufacturers to closely examine various aspects of their businesses and consider what may need to change, possibly permanently, to adjust to the new COVID-19 reality we are living in.

Furthermore, businesses have begun to realize the importance of continuously monitoring their suppliers, especially those overseas, for risks and disruptions as they try to accommodate many personnel issues, supply chain disruptions, and uncertainty in general.

Keep reading to learn what this new survey and other news sources are reporting about the change to manufacturing and supply chain businesses as the result of the pandemic, and how these changes stand to impact the commercial real estate market.

Widespread Impact in a Variety of Areas

Respondents to the survey estimated that on average about 43% of their entire supply chain suffered some kind of interruption. For the majority of respondents, this was due to fluctuation in supplier pricing and safety restrictions causing orders to be paused or slow to fill. The next most common interruption was the need to find suppliers in other geographic regions due to import/export restrictions, followed by the challenge of suppliers going bankrupt. Many manufacturing businesses didn’t experience just one of these interruptions, but a combination of several which made for an exceptionally chaotic time when COVID-19 first hit. Now that the world has gone on to accept where we are the new reality, at least for the foreseeable future, manufacturing and supply chain industries are shifting from short-term considerations to long-term changes that will make them more stable in the future to sustain a global event in the future.

What this means for commercial real estate: As businesses are reacting to the widespread impact of COVID-19 on manufacturing and supply chain operations, there is a valuable opportunity for commercial real estate owners and investors here in the United States to position their properties as solutions for addressing these changing needs. Businesses may need more space, or a different configuration of space to accommodate their new systems and processes. The more flexible CRE professionals can be with their space, the more they will be able to attract new tenants and even expand their portfolio.

Shift to Reshoring and Nearshoring

In an effort to learn from what this pandemic has already taught us, manufacturing businesses have shifted their focus toward solutions that stand to reduce risk and protect against future shocks as of the likes of COVID-19. Many businesses are taking steps toward retooling their supply chain, and one major shift in mindset is reshoring or nearshoring manufacturing that was once offshore. Reshoring is the process of bringing back overseas supply chain operations to the country of origin and nearshoring is the process of bringing supply vendors closer to the point of origin, from farther overseas destinations. Reshoring and nearshoring an operation’s most vital materials reduces the risk of being held hostage by offshore suppliers.

In that same survey, 97% of respondents said they agree that better visibility into their suppliers is imperative. When various components of a business are broken up and distributed all across the globe, it can be nearly impossible to keep your thumb on all aspects of operations and it can make it harder for these points of operations to communicate effectively with one another. Now more than ever, businesses are seeing the value of keeping their operations within the same country, if and when it’s possible.

What this means for commercial real estate: For commercial real estate owners and investors, this means the demand for industrial space is going to rise. As businesses look to retool their supply chain and bring components back to the United States, they will inevitably seek more warehousing and manufacturing space to accommodate their growing needs.

The Smartest Businesses Are Acting Now

In such a challenging environment, the most forward-thinking businesses are not wasting time addressing vulnerabilities in their supply chains. Many respondents (98%) are planning to take some kind of action to build resilience against future disruptions – and the top courses of action are identifying and employing alternative suppliers, continuous monitoring, and increasing reshoring capabilities. Additionally, diversifying or localizing supply chains are a way to reduce costs, as well as better prepare for future economic disturbances.

What this means for commercial real estate: Now is the time to position your CRE assets as solutions for manufacturing and supply chain businesses. If your space is a fit for such needs, you should market it as such. Be direct in the unique benefits your space can provide a business. For industrial businesses, this means a large and functional space located conveniently for transportation. The Central Pennsylvania region is accessible to major cities and transportation hubs on the East Coast. Commercial real estate space along the I-81 and I-83 corridors will benefit from any beefing up of supply chains and logistics in this area.

With the impact of COVID-19 causing many manufacturing businesses’ to change how and where they make, store, and transport goods, the silver lining is that the Central Pennsylvania is likely to experience an increase in demand for industrial and manufacturing space. This will in turn drive new construction, bring more jobs to the area, and strengthen the overall economy. This is not to overlook the many significant challenges the pandemic has caused to all industries, but it’s at least one path that is headed in the right direction, particularly for industrial real estate in Central PA.

Do you have a question or idea related to manufacturing, commercial real estate, and COVID-19? Join the conversation by leaving a comment below.

[Online Resources] Real Estate, agent, business, businesses, central pennsylvania, Commercial Real Estate, commercial real estate broker, commercial real estate invement, COVID, COVID-19, CRE, distribution, global, harrisburg, industrial, industrial supply chain, Mike Kushner, Omni Realty Group, onshore, overseas, pandemic, pennsylvania, processes, shipping, space, tenant representative, transportation, warehouse, warehousing

A Decline in International Students Will Hurt a Lot More than Colleges and Universities

Posted on March 22, 2019 by Mike Kushner in Blog, Community, Trends No Comments

According to a report by MarketWatch, the number of overseas students coming to the U.S. for grad school declined for the second year in a row. There is much speculation as to what could be causing this trend; however, one reappearing theme ties back to the current political climate here in the United States.

As you likely remember, President Donald Trump initiated a ban on people entering the U.S. from multiple Muslim-majority countries, all of which have a track record of sending students to America for higher education. It’s not difficult to see a near-immediate impact. For example, U.S. graduate school applications from Iran, one of the countries targeted by the travel ban, fell 27% between fall 2017 and fall 2018. The travel ban isn’t the only blamed culprit. President Trump has floated changes to student visas that would reduce the amount of time international students can stay in the U.S.

Naturally, colleges and universities in the U.S. who rely on international students to make up a significant portion of their admissions are concerned. If the U.S. continues to present hurdles that make it unappealing, if not impossible for certain international students to study in the U.S., our colleges and universities are not the only pillars of our community who should be concerned. A decline in international students will have a ripple effect on our economy which will flow into many different industries, including real estate.

How significant is this impact and what industries should be most concerned? Let’s take a closer look at the economic impact of fewer international students coming to the U.S.

International Students Drive Economic Growth

Simply put, international students are pivotal to our economy. First, they often pay the highest tuition rates which is why colleges and universities carefully account for enrolling so many international students to keep their budgets in line. Next, while international students are studying in the U.S., they are spending money on food, clothing, living essentials, as well as renting space to live. Many smaller colleges have built on-campus apartments primarily for the use of their international students. Compared to students that reside with their parents and commute to school, international students have a markedly different economic impact on the school and the surrounding community.

To put a value on this point, the Institute of International Education, an organization that promotes research and international study, estimates that international students contributed $39 billion to the U.S. economy in 2017. In fact, some colleges and universities rely so heavily upon their international students that they have gone as far as taking out an insurance policy to protect themselves against the drop in international enrollment!

A Local Look

The facts and stats reporting the decline in international students coming to the U.S. takes a national look, but what about locally here in Central Pennsylvania? Are we seeing the same trends? One of the area’s leading universities for international enrollment is Penn State Harrisburg. College Factual ranks Penn State Harrisburg as 114th out of a total 1,300 colleges and universities for popularity with international students. And the pool of international students is diverse. At least 50 countries are represented on the Penn State Harrisburg campus with the most being from China, India, and, South Korea.

Interestingly from 2011 to 2016, enrollment of international students has been steadily increasing with 716 international students being enrolled at Penn State Harrisburg in 2016. What this doesn’t account for is the most recent travel ban and change to student visas implemented in 2017-2018 that would not be reflected in this data; however, it is likely to be released soon. With international students making up about 14.2% of the student body at Penn State Harrisburg, should the University also experience the decrease in international enrollment that has been sweeping the nation, it will join the ranks of so many other educational institutions hurting due to this downward trend.

As It Relates to Real Estate

It’s clear how international students impact the colleges and universities in which they are enrolled, but what impact do they really have on real estate and is this decline enough to cause any significant changes to our residential and commercial real estate markets?

International students arriving in the U.S. to study are in immediate need of semi long-term housing, typically at least two years and up to 6+ years depending upon the type of degree they are pursuing. International students can technically choose to purchase real estate on their student visa, but mortgages and lending have a whole host of challenges, making cash to most desirable and feasible option for purchasing home a home. Most commonly, international students decide to rent real estate either from the college or university that they are attending or from a landlord in the community.

Depending upon the demand for off-campus student housing, some real estate investors have created a significant business around owning and renting out real estate to students, including international students. Should there be a severe enough decline in international students, this could cause a decrease in demand for real estate. Property owners will need to make a strategic decision to either ride this wave, with a decreased income for an unknown period of time, or sell off some of their properties if they feel this trend could last a while.

Additionally, should a decline in international students persist, colleges and universities whose campus housing is mostly occupied by international students are not likely to invest in renovating or adding to this real estate until the decline stabilizes and/or reverses.

Key Things to Keep in Mind

All-in-all, this trend in decreasing enrollment from international students is one we must keep an eye on for a variety of reasons. When our colleges and universities are economically impacted, it is highly likely that other businesses and the community as a whole will also feel an impact. Should this provide to be a short-lived trend that passes as the political climate changes, there is the probable outcome that things will return to normal and possibly better than before.

However, we would be shortsighted to not think beyond forces within the U.S. To compound the issue, other counties are also competing for international students and are surely making every effort to market themselves as the most attractive option. It will be a constant battle for the U.S. to retain and grow its international students. Given our country’s reputation for high-quality education, this is not an impossible feat, but we must remain strategic to stay ahead of the curve!

What do you feel are the most critical areas to be impacted by a decline in international students? Beyond colleges and universities what other industries will be most significantly impacted?

Share your ideas by leaving a comment below!

 

[Online Resources] Real Estate, aborad, admissions, businesses, central pa, colleges, community, economic impact, Economy, enrollment, harrisburg, international students, landlord, Mike Kushner, money, Omni Realty, overseas, penn state, pennsylvania, property, real estate investor, renting, students, study, trends, universities

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