READ THE DIGEST<\/strong><\/a><\/div>\n<\/div>\n\n\n\n\u201cLooking ahead, 2024 is shaping up to be a year of rebuilding,\u201d Mark Russo, senior director, head of industrial research, Savills<\/strong>, told Commercial Property Executive.<\/em> \u201cLately, the market’s been swinging more in favor of tenants, mostly thanks to a surge in new development. But don’t expect that to stick around forever.\u201d<\/p>\n\n\n\nOne key aspect of high flow through properties is a well-planned dock door layout to prevent issues with bottlenecking. Image courtesy of Realterm<\/em><\/figcaption><\/figure>\n\n\n\nLocation, transportation access and available labor are key for all tenants. Beyond that, wishlists will vary depending on what the company makes or distributes. But still, trends can be observed.<\/p>\n\n\n\n
\u201cIt\u2019s a very nuanced picture market by market but overall demand for industrial product remains generally strong,\u201d Mason Waite, managing director of asset management, BKM Capital Partners<\/strong>, said.<\/em><\/p>\n\n\n\nZeroing on the building\u2019s specs<\/h2>\n\n\n\n Once tenants have narrowed down the submarket they want to be in, they start comparing the characteristics of different buildings\u2014and today there are more to choose from.<\/p>\n\n\n\n
\u201cQuestions like \u2018does this place have the right ceiling height, column spacing, loading docks, truck access, parking and power supply for what we do?\u2019 start to matter,\u201d Russo explained.<\/p>\n\n\n
\n
\n\t\t\t\n\t\t\t\tSometimes, the square footage of a yard area matters more than the square footage of the industrial property itself. Image courtesy of Realterm<\/em><\/figcaption><\/figure><\/div>\n\n\nAnother key element of a building is its size. The RMR Group<\/strong> recently completed a 194,000-square-foot industrial lease expansion to give a tenant access to additional warehouse, manufacturing and trailer parking space. <\/p>\n\n\n\n\u201cWith increased e-commerce sales as a percentage of total retail sales, retailers are bolstering their omnichannel distribution channels, requiring additional warehouse space to fulfill orders at a faster rate,\u201d Marc Krohn, vice president, The RMR Group, said.<\/p>\n\n\n\n
Square footage isn\u2019t always the determining factor, though. Richard Seybolt, vice president & fund manager, Realterm<\/strong>, explained. <\/p>\n\n\n\n\u201cWe have learned that building components translate to a more efficient property that can process more freight volume,\u201d Seybolt said. \u201cAnd a lot of that has to do with that abundance of yard area.\u201d<\/p>\n\n\n\n
Therefore, some tenants actually prefer a smaller building with excess parking to allow tenants the ability to more effectively and efficiently maneuver and stage trailers. Properly designed dock doors can limit bottlenecking when it comes to processing freight. <\/p>\n\n\n\n
\u201cThe beauty of industrial space is that it all comes down to function,\u201d Waite said. \u201cThe product that does the best has accessible drive aisles and loading docks, sufficient power, adequate clear ceiling heights, and\u2014like every good piece of real estate\u2014is well located.\u201d<\/p>\n\n\n\nIndustrial markets near east and west coast ports are attractive to industrial tenants. Yet, with high prices, many companies are moving to secondary markets in proximity to these areas, causing a pricing runoff. Image courtesy of The RMR Group<\/em><\/figcaption><\/figure>\n\n\n\nPowered up<\/h2>\n\n\n\n Increasingly, access to power is the dominating factor when it comes to choosing a building.<\/p>\n\n\n\n
\u201cWith respect to distributors, one of the things that they\u2019re looking for today–outsized versus what it may have been pre-pandemic–is access to power, particularly electrical power to support ongoing operations,\u201d said Adam Petrillo, executive managing director, Newmark\u2019s<\/strong> Industrial Advisory Group.<\/p>\n\n\n\n
\n\t\t\t\n\t\t\t\tData as of January 2024. Source: Yardi Matrix<\/figcaption><\/figure><\/div>\n\n\nPower is a priority because of increased automation within facilities and the increasing amount of power needed for the movement of goods.<\/p>\n\n\n\n
\u201cToday\u2019s manufacturing processes often utilize advanced machinery, which require higher power supplies,\u201d Waite said. \u201cWe\u2019re seeing this across all the markets in which we\u2019re active, regardless of unit size, and it\u2019s a requirement that will only continue to gain attention as the U.S. continues its manufacturing overhaul.\u201d<\/p>\n\n\n\n
Add to that a shift towards electric fleets, and some companies rely on power to manufacture their products in the first place.<\/p>\n\n\n\n
\u201cConsider sectors like cold storage, advanced manufacturing, vertical farming, and even crypto-mining, all of which require substantial energy,\u201d noted Russo.<\/p>\n\n\n\n
Krohn said that for smaller industrial tenants, or those looking for less than 100,000 square feet, power needs might only be 200 AMP 277\/480 volt 2-phase 4 wire service. But as that square footage and clear height increases, the power requirement might bump up to anywhere from 2,000 AMPS to 3,000 AMPS.<\/p>\n\n\n\n
\u201cIf the warehouse is going to be heavily automated or the use changes to manufacturing, the requirement could easily exceed 4,000 AMPs,\u201d Krohn said.<\/p>\n\n\n\nThe need for power is becoming increasingly more crucial as industrial tenants more broadly embrace automation within factories. Image courtesy of The RMR Group<\/em><\/figcaption><\/figure>\n\n\n\nThe search for sustainability<\/h2>\n\n\n\n Sustainability initiatives are also increasingly sought after in the industrial space, and landlords may be more willing today to answer tenant requests in the form of green leases.<\/p>\n\n\n\n
\u201cSome of our offerings include onsite renewable energy programs inclusive of rooftop solar strategies, real-time monitoring to analyze energy and water consumption to optimize use of natural resources, installation of EV charging stations and adding motion sensors and LED lighting,\u201d Krohn said.<\/p>\n\n\n\n
EV infrastructure, which is being bolstered by new government incentives and mandates, is the most in-demand sustainability requirement, Russo said.<\/p>\n\n\n\n
\u201cTenants with higher power requirements are generally looking to see if there is supplemental power available from a solar array,\u201d Waite said. \u201cAdditionally, with increased EV adoption, tenants inquire about their employees’ ability to charge personally owned vehicles onsite.\u201d<\/p>\n\n\n\n
![\"One](\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2024\/03\/Realterm-IOS-fleet-maintenance-in-Central-Pennsylvania-Credit-Realterm.jpg?w=1024\")
![\"Sometimes,](\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2024\/03\/Realterm-IOS-truck-terminal-in-Laredo-Texas-Credit-Realterm.jpg?w=1024\")