The U.S. industrial real estate sector continues leading the commercial real estate pack thanks to an ongoing e-commerce boom that has drastically expanded needs for fulfillment and warehouse space. Even with space at a premium, however, some of the forward-thinking, tech-savvy online sellers have turned up their noses at older and outdated industrial properties.
The newest generation of industrial tenants brings with them an updated list of wants and needs that landlords must eventually accommodate if they want their properties to remain relevant. Here are some amenities and trends you can expect to accelerate in industrial real estate over the next several years.
As the supply chain puts greater focus on resiliency, industrial operators will seek properties that give them greater versatility and agility within their operations. Flexible industrial space allows fulfillment operations, manufacturers, logistics providers, or other industrial businesses to set up office space, temperature-controlled areas, showrooms, break rooms, training areas, and any other needs they may have. Beyond an ability for physical space adjustments, these buildings also need reinforced roofing systems that can support extra HVAC equipment and power systems that can support industrial machinery, such as machine tools, conveyor systems, and more.
Features like these let tenants easily alter their space over time to suit changing needs instead of seeking new leases after every major operational shift or growth spurt. Industrial real estate capacity is expected to remain tight for the foreseeable future, so giving tenants a space where they can grow in place will now become a major selling point.
Gathering around the water cooler isn’t just for corporate cubicle workers anymore. As the warehousing and manufacturing sectors take steps to combat labor shortages, creating a more welcoming work environment for employees will rank high on the to-do lists of modern industrial businesses. This process will involve building a more positive culture, and one way to do that is through perks. While it might never be safe for employees to let their dogs run loose in the machine shop, that doesn’t mean industrial buildings can’t have attractive features.
Luxury office workers have long been familiar with amenities, such as on-site snack bars, coffee shops, gyms, or in-house daycare centers. Incorporating space for these conveniences into industrial facilities will help logistics and manufacturing businesses attract and retain employees. As industrial work continues to pursue automation, extra perks of this nature will also help industrial tenants to attract valuable tech talent from other industries where these benefits are already standard.
Industrial businesses have increasingly realized the benefits of automation. Computer numerical control (CNC) machine tools have become extremely common in machine shops, and many logistics and fulfillment operations turned to robots and cobots to augment their workforces when social distancing forced them to space out employees in already understaffed warehouses.
These machines and the control systems that operate them usually require good internet connectivity. Unfortunately, the same sturdy construction that makes industrial buildings well-suited for rugged and demanding operations also tends to cause bad signal strength. Older buildings also tend to have poor physical technology infrastructure that may need updating. Making sure your building is ready to quickly implement Wi-Fi, SD-WAN, and other advanced connectivity technologies will make it more attractive to your next industrial tenant.
About Phoenix Investors
Founded by Frank P. Crivello in 1994, Phoenix Investors and its affiliates (collectively “Phoenix”) are a leader in the acquisition, development, renovation, and repositioning of industrial facilities throughout the United States. Utilizing a disciplined investment approach and successful partnerships with institutional capital sources, corporations and public stakeholders, Phoenix has developed a proven track record of generating superior risk adjusted returns, while providing cost-efficient lease rates for its growing portfolio of national tenants. Its efforts inspire and drive the transformation and reinvigoration of the economic engines in the communities it serves. Phoenix continues to be defined by thoughtful relationships, sophisticated investment tools, cost efficient solutions, and a reputation for success.