Commercial Investment Real Estate September/October 2019 | Page 30

features truck ramps leading to loading docks on the second
level, while the third floor is served by forklift-accessible
freight elevators for lighter-scale warehouse operations.
Developers are going vertical on urban sites to maximize
density and justify higher building and land costs. How-
ever, it can be difficult to make multilevel sites work in an
urban setting. One challenge is the space required to allow
for truck docks and maneuvering. For example, the Seattle
project included an earthen truck ramp on both sides of the
building, whereas most close-in land sites are already maxed
out on the square footage. “Prologis delivering this to our
market is still being proven,” Durkin says. The first lease
has been signed, but until the building achieves full occu-
pancy, people are hesitant to jump in and embrace multilevel
development, he adds.
Amazon is certainly leading the charge to procure effi-
cient space to accommodate last-mile delivery. “The con-
figuration is quite a bit different than what you have seen
in traditional warehousing,” says Vanessa Herzog, CCIM,
SIOR, a principal at Lee & Associates in Tacoma, Wash.
Typically, companies are looking for 15 to 20 acres that can
accommodate a 100,000-sf building, with the rest of the
site devoted to truck parking and vehicle storage. Amazon
also is looking at opportunities to acquire vacant retail big-
box stores that are close to the consumer, such as Sears and
Sam’s Club. Those are examples of properties that could be
modified to accommodate last-mile distribution that also
have a lot of parking, she adds.
New Facilities Combine Efficiency, Aesthetics
Warehouses are no longer the windowless, concrete boxes
that were the norm in the past. Users are demanding mod-
ern, efficient, sustainable buildings that can accommodate
the latest in automation and robotics — all while helping
them attract and retain workers.
Prologis also has started incorporating health and well-
being into building design. In January, the firm’s Park
Tacoma, Building D, in Tacoma, Wash., became the first
logistics facility in the world to be awarded a WELL cer-
tification by the International WELL Building Institute,
an industry benchmark that assesses how building design
and management can enhance human health. The facil-
ity achieved certification with an emphasis on natural
light with skylights, clerestory windows, and dock doors
positioned to maximize daylight exposure. It also features
murals painted on select portions of the building.
In automation and warehouses that utilize robot-
ics, “Amazon is leading the trend,” adds Tony M. Gug-
lielmo, CCIM, president and owner of Allied Com-
mercial Real Estate Inc., in Ontario, Calif. For example,
Amazon warehouses pick products on a lower level,
send it up a conveyor belt to a mezzanine level where it
is packaged, and then sorted automatically depending,
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September | October 2019
for example, if UPS or the U.S. Postal Service will ship it.
Other big retailers such as Walmart and Target also are
increasing their use of automation in warehouses.
For many users, functionality is still the focus. Developers
building new industrial facilities to stand the test of time
over the next two decades need to create large boxes with
high, clear ceiling heights and open floors unrestricted by
columns. The 1990s-era buildings that were 24 feet tall have
been replaced by a new standard where heights typically
reach 32 to 38 feet, sometimes topping out at 42 feet. “A
lot of these companies look at not just your square footage,
but the cubic footage and how much product they can fit,”
Guglielmo says. An example is a 100,000-sf building with
40 feet of clear height versus that same footprint with a
24-foot clear height in terms of cubic footage.
Some users are still building mega-facilities ranging
from 400,000 sf upward of 1 million-plus sf. Home Depot
is building a new 1.3 million-sf warehouse near the Port
of Tacoma that is split into three divisions. The facility is
anticipated to feature a traditional import center that houses
new seasonal product, a will-call component where people
can pick-up online orders, and a division that provides last-
mile distribution, says Herzog.
Although e-commerce tends to dominate conversations
in the industrial sector, manufacturers also are upgrading
facilities to account for increased use of technology and
robotics. Manufacturing facilities generally need more
power and are less concerned about ceiling heights. Auto-
mation for both manufacturers and distributors requires
immense power, which in turn is driving a bigger appetite
for more sustainable, energy-efficient buildings. Distribu-
tion users are looking for functionality in getting products
out the door quickly and efficiently. Tenants are demanding
more loading dock doors, including multiple grade-loading
dock doors to accommodate different truck sizes as well as
more truck and trailer parking to support the transporta-
tion of goods. In addition, facilities are being equipped with
dock doors that allow cargo vans and trucks to drive into
facilities for loading.
A common theme across property types these days is
flexibility, allowing building facilities to adapt and change.
However, such flexibility can be difficult in an ever-chang-
ing supply chain, Snyder notes. Two key characteristics to
achieving such flexibility are land dedicated to expansion
and sufficient power to capitalize on emerging technology
for product movement, he says. “A logistics property with
too little electricity; insufficient clear heights for modern
racking and conveyance systems; or inadequate parking for
either trailers or employees can be the difference between
a successful logistics property and one that fails,” he says.
Beth Mattson-Teig is a business writer based
in Minneapolis.
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