Many cold storage warehouse spaces use automated storage and retrieval systems to manage inventory more strategically. (iStockphoto via Getty Images)
I have been a proud member of the Industrial and Office Realtors Association since 2018.
This industry association’s semi-annual conferences are epic. The destination is great. The education is unparalleled. And the network is also unparalleled!
A little background on SIOR. This organization has been in existence for his 80 years and is the worldwide office and industrial real estate association. He has 3,900 members in over 50 countries.
We returned from Spring Gathering last week, and now we’ve had some time to decompress and reflect on what we’ve learned. This column will share some insights.
industrial technology
I spent time with industrial real estate brokers from across the United States and around the world. One conversation was very eye-opening.
We learned about Automated Storage and Retrieval System (ASRS for short). This high-tech inventory management system helps logistics providers operate more efficiently and timely, reducing the number of employees required.
Many cold storage warehouse spaces use ASRS to manage inventory more strategically. In one example, an occupier called AmeriCold is building new buildings around such systems, often reaching 150 feet in height. To put this into context, it’s about 12 stories tall, roughly four times the height of modern concrete megastructures being built in the Inland Empire.
Data centers and so-called chip manufacturing factories that will power artificial intelligence are being built one after another across the United States.
A fundamental challenge for industrial real estate applications is the severe demand for electricity. Developers of these buildings are looking first for power and the communities they can access, not the price of the land on which to build.
A new concept called the mini-grid is emerging across the country. These systems are encapsulated power, delivering electricity generated by solar, wind, or other forms of renewable energy to a specific location.
industrial round table
From agents representing Mexico, Tampa, Florida, Atlanta, Georgia, Charlotte, North Carolina, Nashville, Tennessee, Dallas, Texas, Houston, Texas, Rotterdam, Netherlands, Toronto, Canada, Laredo, Texas, Columbus, Ohio, Indianapolis I heard the story. , Los Angeles, Indiana.
Strangely, not a single person in this roundup was from the West Central region, such as Denver, Salt Lake City, or Phoenix.
Certain themes were repeated. Similar to Southern California, large inventories from 100,000 square feet to 500,000 square feet are significantly overbuilt, so there is more supply than demand.
Shortages occur in buildings larger than 500,000 square feet. And the demand for large boxes is still quite high. Nationally, the most robust size range is buildings less than 50,000 square feet. Lack of electricity and sustainable resources were the most mentioned challenges for the future.
All markets are experiencing a decline in occupancy demand due to inflation, higher borrowing rates, and inventory withdrawals following the coronavirus pandemic. A representative from Los Angeles opined that the company is at the bottom in terms of rents, as rents have fallen by 30% to 40%.
He also reiterated that 800,000 square feet or more is the optimal size range, as are buildings less than 50,000 square feet. The Port of Los Angeles is doing record business.
Third-party logistics operators, or 3PLs, are renegotiating leases initiated in 2020, 2021, and 2022.
Finally, some local insurance companies require electrical panels to be replaced to reduce the chance of fire.
It is very interesting to hear about the successes and struggles of other SIOR brokers across the country. We are very much looking forward to our fall conference, which will be our home game in Hollywood.
Allen C. Buchanan, SIOR, is president of Lee & Associates Commercial Real Estate Services in Orange. Contact him at abuchanan@lee-associates.com or 714.564.7104.
