Trends and Predictions for Industrial Real Estate from NAIOP I.CON Conference
Last week, more than 600 attendees attended the NAIOP I.CON Conference to learn more about the trends that will be impacting industrial real estate. Topics included: the impact on possible changes in trade agreements, the development of supply chain management allowing for nearly instant delivery of products and the impact of cannabis legalization in many states. Key highlights from the panel discussions include:
- There is a major focus on the “last mile”, a term used in supply chain management to describe delivering products to your home.
- Last mile is giving new life to infill / older buildings.
- Location trumps all for last mile buildings, and occupiers will pay premium rents for these buildings.
- Last mile buildings are for moving product, not storing product, so many of the traditional amenities like 30-foot clear height are not important.
- City leadership must recognize that last mile re-use is valuable to constituents and be welcoming to these uses.
- Last mile facilities are providing new life for 50,000 to 100,000 square foot older industrial buildings or vacant retail spaces.
- Of Amazon’s 100 million square feet of logistics space, only 3 million is focused on last mile.
- Developers like ProLogis are getting creative and developing Georgetown Crossroads, a 3 story, 414,000 s.f. logistics building on 9 acres in Seattle.
- Multistory logistics facilities are also being discussed in gateway markets like San Francisco, Los Angeles, Northern New Jersey and Miami.
- Japan and Singapore utilize multistory distribution centers, even up to 11 stories, but use smaller trucks.
- In California, marijuana operations and dispensaries will challenge last mile delivery for space and may be preferred by cities due to its tax generating capacity.
- Warehouses can be retrofitted to grow marijuana, but the capital expenditure is more than 5 times the cost of a green house.
- REI Goodyear Distribution Center, the only net zero energy, U.S. Green Building LEED (Leadership in Energy and Environmental Design) Platinum certified distribution center in the world, won the NAIOP Award for Top Industrial Development.
- The Gulf Coast markets will be the biggest beneficiary of the recently completed Panama Canal expansion.