"Large-scale distributors, trying to maintain less inventory and to deliver it more quickly, are turning to third-party logisticians to achieve maximum efficiency," Livingston says. New emerging hub centers and new types of warehouse and distribution centers are surfacing.

Several gateway cities are emerging as clear leaders in this new phase of the warehousing business, Livingston says. Among them: New York, northern New Jersey, Los Angeles, Chicago, Miami and San Francisco.

"These six markets captured 60% of all air freight, for example, and the bulk of maritime shipping," the broker says. Memphis, TN is also emerging as a new key central distribution center, largely from the FedEx hub.

Warehouses and distribution centers are taking on a whole new look, emphasizing elements different from past decades and markets, Livingston says.

For example, warehousing is being consolidated into fewer but larger regional distribution centers of 500,000 sf to 1.5 million sf with a clear height of 30 feet to 32 feet. Flat floors are necessary to handle advance materials handling equipment. The smaller centers are 80,000 sf to 100,000 sf. "To achieve high throughput, shallow depth and high door to square foot ratios are common," says Livingston, founder/chairman of Realvest Partners Inc. in suburban Maitland, FL. "Clear height is less important."

Common to both types of facilities are ESFR sprinklers, wide truck courts, trailer parking and wide band communications links. "Higher usage, as measured by hours per day and days per week, are common," the broker says.

The tight labor market is also affecting design of the warehouses and distribution centers. Employee-friendly picnic areas, break areas, higher parking ratios, landscaping and visual design give a competitive advantage to owners, Livingston says. Day care centers, convenience stores, restaurants and auto repair centers near each other are a key plus.

To gain higher efficiency, logistics management is playing a larger role. "These third-party logistics companies are growing at a 20% rate per year as a result," Livingston says. "All national economies are becoming more global."

This has been brought about from the liberalization of international trade policies arising from GATT, NAFTA and others. "This trend is likely to continue," the broker says.

He cites the total value of imports and exports, which grew to $2 trillion-plus in 1999 from $600 million in 1980. Air freight is growing even faster from lower-weight, higher-value shipments, he says. Martime freight is expanding. "Keep in mind, however, that trucking still handles more than 80% of the total domestic distribution tonnage," Livingston says.

"There have been many changes in warehousing and logistics over the last decade," he notes. "That trend is likely to persist and accelerate as information flow, product design, work force mix and workflow design continue to evolve. This forces developers to seek maximum flexibility in future design and developments."

Instant Insights /

New Economy Forcing Warehouse/Distribution Hubs to Become More Efficient

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