Warehouse and industrial real estate is becoming more specialized. Here is a look at the evolving kinds of warehouse and industrial office spaces dominating the market today:
1. Manufacturing Facilities
These spaces support production or assembly of products. Buildings devote relatively little square footage to offices. Configurations are built around equipment, material inputs, and the products produced. Most have truck loading docks or rail access.
Huge spaces for massive machines, hundreds of workers (or robots), heavy duty power inputs, and accommodations for bulky raw materials and shipping out finished products are features of heavy industry manufacturing facilities. Lay outs are customized to maximize efficiency of processes and space. Examples include oil and chemical refineries, utilities, steel mills, and meat packing.
You will see greater variety in light industry manufacturing spaces. Because these companies are more about assembly than manufacturing, layouts are less customized and more flexible. They often contain a certain amount of warehouse space to ship to wholesalers or final customers.
2. Warehouse Space
The get-it-now impact of the “Amazon Effect” is pushing warehousing to be closer to the final customer.
Location matters intensely in these critical logistic network hubs. Space is configured for efficient—often automated—packing and loading. Access to freeways, rail and airports are in high demand. Agility—reaching customers fast—is valued.
Truck and Railway Terminal Facilities
Multi-modal shipping terminals for truck, railway and air focus on transferring cargo. Storage is minimal, as cross-docking is far more efficient.
Traditional space for storing inventory is still in demand. What is needed is raw interior square footage to accommodate storage and handling equipment. Specialty inventories, such as for frozen food or environmentally sensitive products require customization.
3. Flex Space
The flex space is a trend driven by the need for companies to be nimble. Entrepreneurial companies look for plain space they can configure and reconfigure to fit changing needs. Flex space accommodating all real estate needs under one lease offers more than flexibility; it can improve communication and coordination across company functions. Company executives are in the same space as a manufacturing worker or warehouse foreman.
4. Research & Development Facilities
Facilities that support research and development can be fairly specialized. Lab space, product test space, equipment needs, and IT demands vary widely by industry. A chemical R&D facility may need to conform to environmental safety regulations, while a new vehicle test facility may need space for road testing.
5. Data Centers
Demand data center space is skyrocketing, driven by cloud computing, artificial intelligence, and block chain. Location is less important than access to low cost electricity. The machines themselves consume power, as does the HVAC to keep them humming.
Showrooms that connect products to buyers are important in many industries, from fashion to automotive. They are often configured as flex space, as showroom needs can be highly seasonal. What drives value is proximity to the customer base. Often, industry competitors co-locate so buyers can visit a variety of vendors on one trip.