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Are we witnessing a sea change in development or just a short-term trend in build-to-suit industrial developments? How big is the demand for BTS industrial and logistics facilities? As long as e-commerce, the primary driver, continues growing the BTS trend should continue growing right along with it.

“This is not a short-term trend,” Scott Marshall, executive managing director of industrial services for the Americas at CBRE, tells GlobeSt.com. “This is a systemic change in our business, where retailers are looking at e-commerce as a going concern. The way people are buying products, and therefore the way retailers need to fulfill orders, is a change in the landscape of our business not soon to disappear.”

Marshall sees plenty of developers building on spec, and says they need to anticipate both an e-commerce fulfillment requirement as well as a “standard” warehouse or distribution requirement. Therefore, he says, they design for the building to accommodate mezzanine, additional power or additional washrooms but it is anticipated as an “addition” and the base building would be constructed without these improvements.

From his perspective, attorney Michael Jones of Cole Schotz, a law firm that works with Fortune 500 companies in the Mid-Atlantic, sees a lot of pent up demand for new state-of-the-art warehouse buildings. He says that should take a significant period of time to satisfy.

“There are also many developers and tenants which are new to the New Jersey market while there's a shortage of state-of-the-art buildings to accommodate their requirements,” Jones tells GlobeSt.com. “I anticipate that we will see robust development of spec buildings and BTS construction to accommodate the changing needs of tenants, particularly as more existing buildings become obsolete.”

With every opportunity come challenges—and BTS is no exception. Clearly, the BTS trend is gaining momentum, especially in the Western United States and should continue driving through major markets in the years ahead. But it won't always be easy to get the buildings out of the dirt.

“Securing financing and ensuring that the right partners are in place—such as engineers, architects, manufacturer, and operators—are the primary challenges,” Charbel Farah, senior principal, Syska Hennessy Group, tells GlobeSt.com. “However, after these elements are in place, a BTS project is in an excellent position to meet the goals of property owners and tenants. Heightened collaboration drives innovation while delivering the best value and performance.”

Industry watchers agree that industrial and logistics tenants are seeking bigger buildings to accommodate the increase in product being stored and shipped.

Instant Insights /

Are We Witnessing a Sea Change in Industrial Development?

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