After abortion ruling, biotechs behind novel contraceptives say tide is turning on insurance coverage
For Whitney, the desire to eventually have kids sparked a search for a new type of birth control. Another IUD would prevent pregnancy for too long and…
For Whitney, the desire to eventually have kids sparked a search for a new type of birth control. Another IUD would prevent pregnancy for too long and she needed an alternative until she was ready for children. In 2020, she finally found an option she liked: a new vaginal ring called Annovera developed by TherapeuticsMD. But there was an issue. After changing jobs, her insurance plan denied coverage.
Her options? Switch contraceptives and risk grueling side effects, or embark on a lengthy appeal process. “I kind of just gave in and just took what they were offering me,” said Whitney, who is 34 years old and lives in Wisconsin.
Whitney, who asked that her last name be withheld for privacy reasons, ended up on a birth control pill. It can be difficult to remember to ingest the pill every day, which once forced her to take Plan B, also known as the “morning-after pill.”
“If I had had the birth control that I wanted, I wouldn’t have been in this situation,” she said. “It’s just frustrating.” Whitney isn’t alone in her frustration.
Getting insurers to cover new contraceptives can be difficult, an issue thrust into the spotlight after the Supreme Court overturned Roe v. Wade. As state laws restricting abortion take effect, women’s health advocates and the federal government are pushing payers to provide as many birth control options as possible, including newer products that often aren’t covered by insurance.
Contraceptives are not one-size-fits all, and what works for one woman may cause side effects in another — ranging from weight gain and mood swings to blood clots.
Biotechs — aided by updated regulations, a federal crackdown and public pressure — say the insurance industry is beginning to show more of a willingness to pay for novel forms of birth control. In a sign of greater investor interest in the space, Agile Therapeutics, a women’s contraception company, recently raised more than $24 million in a public offering.
The Affordable Care Act requires that most insurance plans fully cover contraceptives approved by the FDA and prescribed by a clinician. However, lawmakers and women’s health advocates say that insurers have routinely shirked their responsibilities over the last decade.
Saundra Pelletier
Evofem, a biotech that won FDA approval for a non-hormonal birth control gel called Phexxi in 2020, initially struggled to secure insurance coverage. But after the Supreme Court’s draft decision leaked in May and prodding from the federal government, insurers now cover 75% percent of product claims, up from 55% a year ago. That’s according to Evofem CEO Saundra Pelletier, who said there’s more work to do.
“They just weren’t doing the right thing for women,” Pelletier said of some insurers. “But now, when they recognize these attacks on women are real and pervasive and could be increasing, they’re really starting to step up and say, ‘Look, we don’t want to be the holdout.’”
Al Altomari
Agile Therapeutics CEO Al Altomari said that clinicians seem more willing to fight for women’s choice in birth control in recent months, while smaller insurance companies are showing more openness to covering the company’s product. Some of the large pharmacy benefit managers haven’t moved just yet, he added — but he believes eventually they will.
His company’s hormonal birth control patch called Twirla was approved in 2020. Agile touts the product as a lower-dose and more convenient option than other patches and birth control pills. Women apply the patch once a week for three weeks, followed by an off-week when their cycle occurs.
Twirla’s first few quarters on the market were challenging, Altomari said, between struggling with insurers and launching in the middle of a pandemic.
“There has been really a lot of noncompliance by the insurance companies and this has been really a big issue that’s actually ended up in the White House,” he said. “It’s hurting all of our companies, including ours.”
But the Supreme Court decision in Dobbs v. Jackson Women’s Health Organization triggered new interest in the company, fueling Agile’s public offering that raised $24 million earlier this month and another at-the-market raise of $12.8 million.
“We’re growing, we think in the second quarter somewhere between 25 and 30% quarter-on-quarter growth, despite these challenges,” Altomari said. “We think things are going to get a lot better, faster for all of us.”
Some drugmakers argue holes in insurance coverage have stifled innovation. Just look at Big Pharma, which hasn’t made much progress on the contraception front in the last decade or so, Altomari said.
“All the innovation in contraception, in particularly the last 10 to 15 years, has come out of little companies,” he said. “Each one of these companies has passion for the space.”
When its gel launched, Evofem also found itself in insurance purgatory. Some payers didn’t want to cover Phexxi because it didn’t fit into existing birth control categories that are part of a federal list guiding coverage decisions. Pelletier said Evofem asked HHS to update the list, but the agency stated it shouldn’t be a proxy for coverage decisions.
Endpoints reached out to HHS’ Office on Women’s Health, which oversees the guidance, but did not receive a response as of press time.
In January, the Women’s Preventive Services Initiative, which works with HHS, recommended that “any FDA-approved, -granted or -cleared contraceptives” should be made accessible as part of contraceptive care. The language has been widely interpreted to mean insurers should cover birth control.
Mara Gandal-Powers
“It is pretty clear that if something has approval from the FDA, it should be getting coverage,” said Mara Gandal-Powers, director of birth control access at the National Women’s Law Center.
But there still might be exceptions. A plan can charge a cost-sharing fee for birth control filled at an out-of-network pharmacy if they have it covered without cost-sharing at an in-network pharmacy, Gandal-Powers noted. In addition, some employer plans were grandfathered in when the ACA went into effect, and don’t need to cover preventive services.
A 2020 report sponsored by the Kaiser Family Foundation and nonprofit Susan Thompson Buffett Foundation found that the share of oral contraceptive users paying out-of-pocket dropped from 96% in 2010 to 10% in 2018 after the Affordable Care Act passed. But many women are still paying out of pocket for contraception.
Gandal-Powers said that some insurance plans violate HHS’ most recent guidance by requiring patients to try a number of products first before they can get coverage for a newer form of birth control that isn’t on the list. She has seen plans that require women to try eight products before they can get full coverage for their choice, regardless of what a clinician has recommended. And many women don’t realize they can appeal decisions that flat-out deny coverage, she said.
If a woman’s first choice is denied, plans are supposed to have “an easily accessible, transparent, and sufficiently expedient exceptions process that is not unduly burdensome on the individual or a provider,” according to updated 2015 guidance issued by HHS, which allows women to get access with the help of a provider.
“We’re sort of seeing twofold with newer products, that plans are saying they don’t have to cover them because they don’t appear on this outdated list, and plans don’t have the cautionary exceptions process in place,” Gandal-Powers said.
Insurance companies continue to face pressure in the weeks since the Dobbs decision, as the Biden administration has stepped up efforts to compel insurers to cover birth control. Last month, HHS Secretary Xavier Becerra, Treasury Secretary Janet Yellen and Labor Secretary Martin Walsh said in a letter to payers that they’ve received “troubling and persistent reports” of noncompliance.
“For this reason, we are calling on your organizations to remove impermissible barriers and ensure individuals in your plans have access to the contraceptive coverage they need, as required under the law. It is more important than ever to ensure access to contraceptive coverage without cost sharing, as afforded by the ACA,” they wrote.
If a plan fails to comply with the act, there’s a range of enforcement actions the government can take, including monetary penalties, Gandal-Powers said. For more than 10 years, the National Women’s Law Center has been running a hotline to help women understand what’s covered under their plan, and how to appeal decisions that don’t comply with the ACA.
When asked for comment on their policies around contraceptives, the Blue Cross Blue Shield Association, a federation of locally operated Blue Cross companies, issued a statement:
BCBS companies take compliance with state and federal laws very seriously and are committed to ensuring access to preventative services, including contraception. BCBS companies are reviewing existing policies to make sure there are no unintended barriers to contraceptive access for members.
Aetna International declined to comment, while Humana and UnitedHealth Group did not respond as of press time.
For Evofem and other biotechs, it isn’t just payers that are paying more attention. Women, clinicians and even investors have been more engaged, Pelletier said. Evofem’s stock more than doubled after the Dobbs ruling and has maintained the momentum. Prescriptions are also up, Pelletier noted.
Sabrina Johnson
“It also reinforces for healthcare investors — this is healthcare,” said Daré Bioscience CEO Sabrina Johnson. “All of a sudden we’ve shone a spotlight on the category and it’s becoming noticed.”
Even though Daré’s lead candidate hasn’t yet entered a Phase III trial, Johnson knew the company would need to start conversations with payers and regulators early on. And being differentiated enough from other products should make it easier to get coverage, she said.
The company is working on a vaginal ring called Ovaprene. It’s similar to the NuvaRing in shape and size, but unlike other products, it’s non-hormonal. Ovaprene has a knitted polymer barrier, which is porous but doesn’t allow sperm to reach the cervix. From the center, the ring releases a form of iron that interferes with sperm mobility.
Daré partnered with both Bayer and the National Institutes of Health, which is co-funding the Phase III trial that’s slated to begin this year. Since the Supreme Court decision, the company has also seen heightened interest from additional investors, according to Johnson.
“There are certain investors who have been outspoken about the SCOTUS decision,” she said.
Will that translate to long-term interest? It’s difficult to say, as the field is risky. However, getting on the right birth control early is of increasing concern to the millions of women whose abortion rights have now been revoked or called into question.
TherapeuticsMD, which developed Whitney’s preferred birth control option, did not respond to a request for comment.
Wisconsin, where Whitney lives, adopted an abortion ban in 1849. And though the state’s governor Tony Evers has said the ban won’t be enforced, some clinics have already halted abortions.
“It’s more about having a choice over your body and what’s best for you,” Whitney said. “No one can make that decision better than yourself.”
The SNF Institute for Global Infectious Disease Research announces new advisory board
From identifying the influenza virus that caused the pandemic of 1918 to developing vaccines against pneumococcal pneumonia and bacterial meningitis in…
From identifying the influenza virus that caused the pandemic of 1918 to developing vaccines against pneumococcal pneumonia and bacterial meningitis in the 1970s, combating infectious disease has a rich history at Rockefeller. That tradition continues as the Stavros Niarchos Foundation Institute for Global Infectious Disease Research at Rockefeller University (SNFiRU) caps a successful first year with the establishment of a new advisory board.
Credit: Lori Chertoff/The Rockefeller University
From identifying the influenza virus that caused the pandemic of 1918 to developing vaccines against pneumococcal pneumonia and bacterial meningitis in the 1970s, combating infectious disease has a rich history at Rockefeller. That tradition continues as the Stavros Niarchos Foundation Institute for Global Infectious Disease Research at Rockefeller University (SNFiRU) caps a successful first year with the establishment of a new advisory board.
This international advisory board was created in part to give guidance on how to best use SNFiRU’s resources, as well as bring forward innovative ideas concerning new avenues of research, public education, community engagement, and partnership projects.
SNFiRU was established to strengthen readiness for and response to future health crises, building on the scientific advances and international collaborations forged in the context of the COVID-19 pandemic. Launched with a $75 million grant from the Stavros Niarchos Foundation (SNF) as part of its Global Health Initiative (GHI), the institute provides a framework for international scientific collaboration to foster research innovations and turn them into practical health benefits.
SNFiRU’s mission is to better understand the agents that cause infectious disease and to lower barriers to treatment and prevention globally. To speed this work, the institute launched numerous initiatives in its inaugural year. For instance, SNFiRU awarded 31 research projects in 29 different Rockefeller laboratories for over $5 million to help get collaborative new research efforts off the ground. SNFiRU also supports the Rockefeller University Hospital, where clinical studies are conducted, and brought on board its first physician-scientist through Rockefeller’s Clinical Scholars program. “One of the surprises was the scope of interest from Rockefeller scientists in using their talents to tackle important infectious disease problems,” says Charles M. Rice, Maurice R. and Corinne P. Greenberg Professor in Virology at Rockefeller and director of SNFiRU. “The research topics range from the biology of infectious agents to the dynamics of the immune response to pathogens, and also include a number of infectious disease-adjacent studies.”
In the past 12 months, SNFiRU often brought together scientists studying different aspects of infectious disease as a way to spur new collaborations. In addition to hosting its first annual day-long symposium, SNFiRU initiated a Young Scientist Forum for students and post-doctoral fellows to meet regularly, facilitating cross-laboratory thinking. A bimonthly seminar series has also been established on campus.
Another aim of SNFiRU is to develop relationships with community-based organizations, as well as design and participate in community-engaged research, with a focus on low-income and minority communities. To that end, SNFiRU is helping develop a research project on Chagas disease, a tropical parasitic infection prevalent in Latin America that can cause congestive heart failure and gastrointestinal complications if left untreated. The project will bring together clinicians practicing at health centers in New York, Florida, Texas, and California and basic scientists from multiple institutions to help the communities that are most impacted.
“The SNFiRU international advisory board convenes globally recognized leaders with distinguished biomedical expertise, unrivalled experience in pandemic preparedness and response, and a shared commitment to translating scientific advancements into equitably distributed benefits in real-world settings,” says SNF Co-President Andreas Dracopoulos. “The advisory board will advance the institute’s indispensable mission, which SNF is proud to support as a key part of our Global Health Initiative, and we look forward to seeing breakthroughs in the lab drive better outcomes in lives around the globe.”
The new advisory board will hold its first meeting on April 11th, 2024, following the second annual SNF Institute for Global Infectious Disease Research Symposium at Rockefeller.
Its members are: Rafi Ahmed of Emory University School of Medicine, Cori Bargmann of The Rockefeller University, Yasmin Belkaid of the Pasteur Institute, Anthony S. Fauci, the former director of the National Institute of Allergy and Infectious Diseases, Peter Hotez of Baylor College of Medicine and Texas Children’s Hospital Center for Vaccine Development, Esper Kallas of of the Butantan Institute, Sharon Lewin of the University of Melbourne Doherty Institue, Carl Nathan of Weill Cornell Medicine, Rino Rappuoli of Fondazione Biotecnopolo di Siena and University of Siena, and Herbert “Skip” Virgin of Washington University School of Medicine and UT Southwestern Medical Center.
Congress’ failure so far to deliver on promise of tens of billions in new research spending threatens America’s long-term economic competitiveness
A deal that avoided a shutdown also slashed spending for the National Science Foundation, putting it billions below a congressional target intended to…
Federal spending on fundamental scientific research is pivotal to America’s long-term economic competitiveness and growth. But less than two years after agreeing the U.S. needed to invest tens of billions of dollars more in basic research than it had been, Congress is already seriously scaling back its plans.
A package of funding bills recently passed by Congress and signed by President Joe Biden on March 9, 2024, cuts the current fiscal year budget for the National Science Foundation, America’s premier basic science research agency, by over 8% relative to last year. That puts the NSF’s current allocation US$6.6 billion below targets Congress set in 2022.
And the president’s budget blueprint for the next fiscal year, released on March 11, doesn’t look much better. Even assuming his request for the NSF is fully funded, it would still, based on my calculations, leave the agency a total of $15 billion behind the plan Congress laid out to help the U.S. keep up with countries such as China that are rapidly increasing their science budgets.
Our data shows how underfunding basic research, especially in high-priority areas, poses a real threat to the United States’ role as a leader in critical technology areas, forestalls innovation and makes it harder to recruit the skilled workers that high-tech companies need to succeed.
A promised investment
Less than two years ago, in August 2022, university researchers like me had reason to celebrate.
The CHIPS act authorized US$81 billion for the agency, promised to double its budget by 2027 and directed it to “address societal, national, and geostrategic challenges for the benefit of all Americans” by investing in research.
But there was one very big snag. The money still has to be appropriated by Congress every year. Lawmakers haven’t been good at doing that recently. As lawmakers struggle to keep the lights on, fundamental research is quickly becoming a casualty of political dysfunction.
Research’s critical impact
That’s bad because fundamental research matters in more ways than you might expect.
For instance, the basic discoveries that made the COVID-19 vaccine possible stretch back to the early 1960s. Such research investments contribute to the health, wealth and well-being of society, support jobs and regional economies and are vital to the U.S. economy and national security.
Lagging research investment will hurt U.S. leadership in critical technologies such as artificial intelligence, advanced communications, clean energy and biotechnology. Less support means less new research work gets done, fewer new researchers are trained and important new discoveries are made elsewhere.
Businesses nationwide thrive by selling the goods and services – everything from pipettes and biological specimens to notebooks and plane tickets – that are necessary for research. Those vendors include high-tech startups, manufacturers, contractors and even Main Street businesses like your local hardware store. They employ your neighbors and friends and contribute to the economic health of your hometown and the nation.
Nearly a third of the $10 billion in federal research funds that 26 of the universities in our consortium used in 2022 directly supported U.S. employers, including:
A Detroit welding shop that sells gases many labs use in experiments funded by the National Institutes of Health, National Science Foundation, Department of Defense and Department of Energy.
A Dallas-based construction company that is building an advanced vaccine and drug development facility paid for by the Department of Health and Human Services.
More than a dozen Utah businesses, including surveyors, engineers and construction and trucking companies, working on a Department of Energy project to develop breakthroughs in geothermal energy.
When Congress shortchanges basic research, it also damages businesses like these and people you might not usually associate with academic science and engineering. Construction and manufacturing companies earn more than $2 billion each year from federally funded research done by our consortium’s members.
A lag or cut in federal research funding would harm U.S. competitiveness in critical advanced technologies such as artificial intelligence and robotics.Hispanolistic/E+ via Getty Images
Jobs and innovation
Disrupting or decreasing research funding also slows the flow of STEM – science, technology, engineering and math – talent from universities to American businesses. Highly trained people are essential to corporate innovation and to U.S. leadership in key fields, such as AI, where companies depend on hiring to secure research expertise.
In 2022, federal research grants paid wages for about 122,500 people at universities that shared data with my institute. More than half of them were students or trainees. Our data shows that they go on to many types of jobs but are particularly important for leading tech companies such as Google, Amazon, Apple, Facebook and Intel.
That same data lets me estimate that over 300,000 people who worked at U.S. universities in 2022 were paid by federal research funds. Threats to federal research investments put academic jobs at risk. They also hurt private sector innovation because even the most successful companies need to hire people with expert research skills. Most people learn those skills by working on university research projects, and most of those projects are federally funded.
High stakes
If Congress doesn’t move to fund fundamental science research to meet CHIPS and Science Act targets – and make up for the $11.6 billion it’s already behind schedule – the long-term consequences for American competitiveness could be serious.
Over time, companies would see fewer skilled job candidates, and academic and corporate researchers would produce fewer discoveries. Fewer high-tech startups would mean slower economic growth. America would become less competitive in the age of AI. This would turn one of the fears that led lawmakers to pass the CHIPS and Science Act into a reality.
Ultimately, it’s up to lawmakers to decide whether to fulfill their promise to invest more in the research that supports jobs across the economy and in American innovation, competitiveness and economic growth. So far, that promise is looking pretty fragile.
Jason Owen-Smith receives research support from the National Science Foundation, the National Institutes of Health, the Alfred P. Sloan Foundation and Wellcome Leap.
What’s Driving Industrial Development in the Southwest U.S.
The post-COVID-19 pandemic pipeline, supply imbalances, investment and construction challenges: these are just a few of the topics address by a powerhouse…
The post-COVID-19 pandemic pipeline, supply imbalances, investment and construction challenges: these are just a few of the topics address by a powerhouse panel of executives in industrial real estate this week at NAIOP’s I.CON West in Long Beach, California. Led by Dawn McCombs, principal and Denver lead industrial specialist for Avison Young, the panel tackled some of the biggest issues facing the sector in the Western U.S.
Starting with the pandemic in 2020 and continuing through 2022, McCombs said, the industrial sector experienced a huge surge in demand, resulting in historic vacancies, rent growth and record deliveries. Operating fundamentals began to normalize in 2023 and construction starts declined, certainly impacting vacancy and absorption moving forward.
“Development starts dropped by 65% year-over-year across the U.S. last year. In Q4, we were down 25% from pre-COVID norms,” began Megan Creecy-Herman, president, U.S. West Region, Prologis, noting that all of that is setting us up to see an improvement of fundamentals in the market. “U.S. vacancy ended 2023 at about 5%, which is very healthy.”
Vacancies are expected to grow in Q1 and Q2, peaking mid-year at around 7%. Creecy-Herman expects to see an increase in absorption as customers begin to have confidence in the economy, and everyone gets some certainty on what the Fed does with interest rates.
“It’s an interesting dynamic to see such a great increase in rents, which have almost doubled in some markets,” said Reon Roski, CEO, Majestic Realty Co. “It’s healthy to see a slowing down… before [rents] go back up.”
Pre-pandemic, a lot of markets were used to 4-5% vacancy, said Brooke Birtcher Gustafson, fifth-generation president of Birtcher Development. “Everyone was a little tepid about where things are headed with a mediocre outlook for 2024, but much of this is normalizing in the Southwest markets.”
McCombs asked the panel where their companies found themselves in the construction pipeline when the Fed raised rates in 2022.
In Salt Lake City, said Angela Eldredge, chief operations officer at Price Real Estate, there is a typical 12-18-month lead time on construction materials. “As rates started to rise in 2022, lots of permits had already been pulled and construction starts were beginning, so those project deliveries were in fall 2023. [The slowdown] was good for our market because it kept rates high, vacancies lower and helped normalize the market to a healthy pace.”
A supply imbalance can stress any market, and Gustafson joked that the current imbalance reminded her of a favorite quote from the movie Super Troopers: “Desperation is a stinky cologne.” “We’re all still a little crazed where this imbalance has put us, but for the patient investor and owner, there will be a rebalancing and opportunity for the good quality real estate to pass the sniff test,” she said.
At Bircher, Gustafson said that mid-pandemic, there were predictions that one billion square feet of new product would be required to meet tenant demand, e-commerce growth and safety stock. That transition opened a great opportunity for investors to run at the goal. “In California, the entitlement process is lengthy, around 24-36 months to get from the start of an acquisition to the completion of a building,” she said. Fast forward to 2023-2024, a lot of what is being delivered in 2024 is the result of that chase.
“Being an optimistic developer, there is good news. The supply imbalance helped normalize what was an unsustainable surge in rents and land values,” she said. “It allowed corporate heads of real estate to proactively evaluate growth opportunities, opened the door for contrarian investors to land bank as values drop, and provided tenants with options as there is more product. Investment goals and strategies have shifted, and that’s created opportunity for buyers.”
“Developers only know how to run and develop as much as we can,” said Roski. “There are certain times in cycles that we are forced to slow down, which is a good thing. In the last few years, Majestic has delivered 12-14 million square feet, and this year we are developing 6-8 million square feet. It’s all part of the cycle.”
Creecy-Herman noted that compared to the other asset classes and opportunities out there, including office and multifamily, industrial remains much more attractive for investment. “That was absolutely one of the things that underpinned the amount of investment we saw in a relatively short time period,” she said.
Market rent growth across Los Angeles, Inland Empire and Orange County moved up more than 100% in a 24-month period. That created opportunities for landlords to flexible as they’re filling up their buildings. “Normalizing can be uncomfortable especially after that kind of historic high, but at the same time it’s setting us up for strong years ahead,” she said.
Issues that owners and landlords are facing with not as much movement in the market is driving a change in strategy, noted Gustafson. “Comps are all over the place,” she said. “You have to dive deep into every single deal that is done to understand it and how investment strategies are changing.”
Tenants experienced a variety of challenges in the pandemic years, from supply chain to labor shortages on the negative side, to increased demand for products on the positive, McCombs noted.
“Prologis has about 6,700 customers around the world, from small to large, and the universal lesson [from the pandemic] is taking a more conservative posture on inventories,” Creecy-Herman said. “Customers are beefing up inventories, and that conservatism in the supply chain is a lesson learned that’s going to stick with us for a long time.” She noted that the company has plenty of clients who want to take more space but are waiting on more certainty from the broader economy.
“E-commerce grew by 8% last year, and we think that’s going to accelerate to 10% this year. This is still less than 25% of all retail sales, so the acceleration we’re going to see in e-commerce… is going to drive the business forward for a long time,” she said.
Roski noted that customers continually re-evaluate their warehouse locations, expanding during the pandemic and now consolidating but staying within one delivery day of vast consumer bases.
“This is a generational change,” said Creecy-Herman. “Millions of young consumers have one-day delivery as a baseline for their shopping experience. Think of what this means for our business long term to help our customers meet these expectations.”
McCombs asked the panelists what kind of leasing activity they are experiencing as a return to normalcy is expected in 2024.
“During the pandemic, shifts in the ports and supply chain created a build up along the Mexican border,” said Roski, noting border towns’ importance to increased manufacturing in Mexico. A shift of populations out of California and into Arizona, Nevada, Texas and Florida have resulted in an expansion of warehouses in those markets.
Eldridge said that Salt Lake City’s “sweet spot” is 100-200 million square feet, noting that the market is best described as a mid-box distribution hub that is close to California and Midwest markets. “Our location opens up the entire U.S. to our market, and it’s continuing to grow,” she said.
The recent supply chain and West Coast port clogs prompted significant investment in nearshoring and port improvements. “Ports are always changing,” said Roski, listing a looming strike at East Coast ports, challenges with pirates in the Suez Canal, and water issues in the Panama Canal. “Companies used to fix on one port and that’s where they’d bring in their imports, but now see they need to be [bring product] in a couple of places.”
“Laredo, [Texas,] is one of the largest ports in the U.S., and there’s no water. It’s trucks coming across the border. Companies have learned to be nimble and not focused on one area,” she said.
“All of the markets in the southwest are becoming more interconnected and interdependent than they were previously,” Creecy-Herman said. “In Southern California, there are 10 markets within 500 miles with over 25 million consumers who spend, on average, 10% more than typical U.S. consumers.” Combined with the port complex, those fundamentals aren’t changing. Creecy-Herman noted that it’s less of a California exodus than it is a complementary strategy where customers are taking space in other markets as they grow. In the last 10 years, she noted there has been significant maturation of markets such as Las Vegas and Phoenix. As they’ve become more diversified, customers want to have a presence there.
In the last decade, Gustafson said, the consumer base has shifted. Tenants continue to change strategies to adapt, such as hub-and-spoke approaches. From an investment perspective, she said that strategies change weekly in response to market dynamics that are unprecedented.
McCombs said that construction challenges and utility constraints have been compounded by increased demand for water and power.
“Those are big issues from the beginning when we’re deciding on whether to buy the dirt, and another decision during construction,” Roski said. “In some markets, we order transformers more than a year before they are needed. Otherwise, the time comes [to use them] and we can’t get them. It’s a new dynamic of how leases are structured because it’s something that’s out of our control.” She noted that it’s becoming a bigger issue with electrification of cars, trucks and real estate, and the U.S. power grid is not prepared to handle it.
Salt Lake City’s land constraints play a role in site selection, said Eldridge. “Land values of areas near water are skyrocketing.”
The panelists agreed that a favorable outlook is ahead for 2024, and today’s rebalancing will drive a healthy industry in the future as demand and rates return to normalized levels, creating opportunities for investors, developers and tenants.
This post is brought to you by JLL, the social media and conference blog sponsor of NAIOP’s I.CON West 2024. Learn more about JLL at www.us.jll.com or www.jll.ca.
We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. By clicking “Accept”, you consent to the use of ALL the cookies.
This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary cookies are absolutely essential for the website to function properly. These cookies ensure basic functionalities and security features of the website, anonymously.
Cookie
Duration
Description
cookielawinfo-checbox-analytics
11 months
This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics".
cookielawinfo-checbox-functional
11 months
The cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional".
cookielawinfo-checbox-others
11 months
This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other.
cookielawinfo-checkbox-necessary
11 months
This cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary".
cookielawinfo-checkbox-performance
11 months
This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance".
viewed_cookie_policy
11 months
The cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data.
Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.
Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.
Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. These cookies track visitors across websites and collect information to provide customized ads.
