The Rapid Change Underway With Industrial Logistics

The Amazon Effect has not only ramped up industrial activity and demand, but it has completely changed industrial logistics and warehouse design as well. Logistics today are already totally different than they were 10 years ago, and in the next decade, it will continue to change rapidly. The changes include the need for larger warehouse spaces, multi-story warehouses and infill properties that can accommodate same-day shipping.

“Warehouse space design is already different than it was five to 10 years ago. For example, prior to the e-commerce evolution, industrial developers would maximize every square foot of a property and build the largest building possible on a parcel of land, leaving little room for employee parking,” Jon Pharris, president of industrial developers and owner CapRock Partners, tells GlobeSt.com. “However, e-commerce tenants require significantly more parking availability for their employees, especially during the peak season, approximately Aug. 1 through Dec. 31. E-commerce users generally do not use as many dock high doors as a typical industrial tenant. They are converting their unused truck courts to expand parking availability and create employee amenity areas.”

In the next decade, these needs will continue to change at a rapid pace. First, more industrial space is needed to accommodate not only demand but the ecommerce use, which requires more space. “More industrial space will be required. NAIOP recently published a report stating that for every square foot of retail space that is lost due to the e-commerce evolution, three square feet of new industrial space will be required,” Pharris says. “The Amazon Effect is trickling down into companies that might not appear to be e-commerce retailers. As customers prefer shopping online instead of at brick and mortar locations, some non-consumer facing companies are taking another look at their business plan and finding opportunities to become third-party fulfillment centers for consumer-facing brands.