Chris Schneider: And just to add to that, I mean, major retailers or corporations have redundancy. That’s one of their strategic things that they always think about. They don’t usually just close one port access because something might happen on a port. So a lot of times they’re redundant supply chains. We don’t think long-term it’s going to change.
Jessica Zheng: Great. Thank you.
Peter Schultz: At the end of the day, companies need to be close to where their customers are to deliver their goods. That’s not really going to change much.
Operator: The next question comes from Bill Crow with Raymond James. Please go ahead.
Bill Crow: Peter, I’m going to pass the question along that I get regularly from investors. And that is, you know, as we look forward, call it 18 months and interest rates may have come down a little bit and the spreads may have eased a little bit. What’s to stop us from getting back to a point where we’ve got 400 million square feet of construction starts?
Peter Baccile: Yes. So there’s been a big pause. Starts are way up, as you know, down about two thirds from the peak in 2022. Here’s the thing. In ’21 and ’22, there were 500 million square feet of starts each year. And that was a direct result of the business activity around COVID when people were just, and you saw e-commerce go from 14% of sales to over 20%. And so this huge surge in demand created this massive influx of capital, which pushed all these new starts. And that’s what we’re digesting now. That was the catalyst for those starts. Demand ought to be more on a upward trajectory, but a flatter upward trajectory instead of that hockey stick, which should mean that capital behaves appropriately and that starts come in, in and around the neighborhood of where net absorption is.
I mean, that’s what you would expect. We don’t see a catalyst yet right now today to say, oh, we need another 400 million or 500 million square feet of starts each year. So that would be the way we look at that question.
Bill Crow: So the fact that I think every one of the public companies is talking about ramping up starts later this year, you don’t think that sort of attitude is in the private sector as much, I guess?
Peter Baccile: You know, that depends a lot on the financing and how they do that. If someone’s going to come in and all cash and worry about the debt part later, that could encourage some new investment and development. Right now, construction loans are very hard to get. And when you can, they’re very expensive. In fact, for the most part, it’s going to make any high barrier deal impossible to prep sales. And that’s where we are. We’re in the highest barrier markets, and that’s where our land holdings are. So maybe we’re a bit insulated from that.
Bill Crow: All right, well, congrats on a great ’23 and a good outlook for ’24.
Peter Baccile: Thanks very much.
Operator: This concludes our question and answer session. I would like to turn the conference back over to Peter Baccile for any closing remarks.
Peter Baccile: Thank you, operator, and thanks to everyone for participating on our call today. If you have any follow up questions, please reach out to Scott or me. We look forward to connecting with many of you in the first quarter. Take care.
Operator: The conference is now concluded. Thank you for attending today’s presentation. You may now disconnect.
