The industrial real estate is popular right now and for a good reason.
Although e-commerce has caused quite a bit of turbulence in the retail sector, it is also creating demand for last-mile warehouses, and even corporate supply chains from companies intent on hopping on this new trend.
At the same time, some experts feel multifamily is slowing down right now. Some investors are turning to the industrial real estate to diversify their portfolios.
Although this trend brings a lot to the table for savvy investors, it also means more competition, not just in terms of purchasing an industrial asset, but also regarding leasing industrial real estate.
One way to help your property stand out from the crowd is to include one or more amenities when renovating an asset.
Here are some of the most popular amenities for the industrial real estate.
Supply Chain Advances Fueling Warehouse Redesign
Amazon has forced retailers to rethink how they meet their customers’ needs.
But anticipating their needs isn’t enough: they need to be able to fill that need – as quickly as possible – in order to get ahead. And one of the most important components is updating their back-end supply so that they can fulfill those requests. Ultimately, that means revamping their supply chains.
Initially, retailers met this challenge by creating multichannel systems that allowed businesses to take orders both online and at brick and mortar stores. Although initially, this seemed to solve the problem, in reality, it brought additional problems, since it meant that double inventory was required, leading to additional expenses.
As a result, omnichannel distribution was developed; a system that allowed retailers to integrate both brick and mortar sales and online sales into one system.
Some retailers use omnichannel distribution to allow customers to pick up online orders in a nearby store. Other more complex systems can check all the stores in a chain, find the requested online item, check the price and availability, and determine where the cheapest place to send the item is located.
These changes impact how industrial assets are designed since the characteristics necessary for an efficient omnichannel supply chain vary greatly from that of standard pre-e-commerce era warehouses.
This Isn’t Your Dad’s Warehouse
Retailers are looking for space that offers them as much as height as possible, to account for mezzanine space and multi-level conveyor systems. As a result, the minimum height is now at least 36 foot, with 40-42 foot ceilings preferred by many companies.
In addition, industrial warehouses need to be able to handle the high level of power required by robotic equipment, computer servers, and sophisticated HVAC and electrical systems.
Green buildings are also in demand, especially since research shows that not only do consumers want businesses to be more environment-friendly but also that businesses save 0.51 cents per square foot in energy costs.
Some green features include passive solar requirements, a light colored roof (to deflect a large portion of solar radiation, which puts less stress on HVAC loads and energy consumption), and using energy-efficient systems, appliances, and fixtures.
Modern warehouses must also be ready to accommodate large numbers of employees – often as much as 1,000 or more per shift, with additional staff hired during the holidays. Large numbers of employees not only means different property layouts, but it also means more parking, security systems, proper ventilation, and daylighting.
The ideal industrial real estate for e-commerce or brick and mortar stores should be located in or next to population centers, have easy access to highways, railroads, and seaports, and be close to contractors. This helps decrease delivery times, costs less, and streamlines the order fulfillment process.
As an investor, knowing how to renovate or build an industrial property that can mitigate supply chain risks while greatly improving the functionality of the property adds tremendous value to a property – and ultimately, your bottom line.