Spotlight : BISNOW - Reduce Your Click to Knock

  • Chelsea Inglis
  • SPG Project Manager
  • Rafn Company

I attended BISNOW's presentation titled "How Will Industrial Real Estate Evolve? Innovation, Technology & The New Trends Shaping The Industry" that had speakers from the Dallas Fort Worth, Texas area who discussed industrial real estate and how the market is reinventing or finding a renewed value (evolving) for tenants.

The focus was on answering the question of why is there a new demand for industrial real estate? You guessed it! The PANDEMIC because of how it has changed the shape of retail. Brick and mortar nearly no longer exist. Millions of square feet of leased space were shuttered overnight all across the globe. What to do with these spaces?

Convert abandoned/decrepit malls or retail developments, reusing existing systems and structures for leased areas including:

  • Distribution Centers – As an example a broker may demo what were anchor tenant spaces (large stores like SEARS) to build out for distribution and use the interior spaces (old stores) for operations/admin/office spaces of the distribution centers.
  • Manufacturing Spaces.
  • Cold Storage Spaces.
  • Solar - Leasing of roof space for utility reimbursement (this truly only works for tenant /owner setups but leasing agents will push forward with these additions to their properties to harness more rents)

Admittedly, this demand may not sustain after the pandemic. That said these are quick and easy conversions for a rapid solution to the demand for e-commerce. In these types of conversions, it was noted that out of 100 malls there may only be a potential for 3-4 that would actually suit the need of the client.

On the new development side, well, things are a bit different. The historic spec industrial model was a 32’ tall tilt-up building. This was a direct reflection of the types of racks that could be installed for product awaiting distribution. Now with new tech and innovation, these types of developments are headed to a much higher building type. Currently a 25 story building with one subterranean level for trucking in and out, one level of true retail, 4 stories of industrial, and 20 stories of multifamily is where some aggressive design types are headed.

The end game here is to bring that stick of deodorant you ordered from Amazon this morning closer to you in distribution. What if that product was on the 3rd floor of the building you live in? These types of “mavericky” (my word, HA!) developments are a hybrid and not too far off in the future. Three of the presenters were already looking at these models for clients. The profit margin on that stick of deodorant when it is close to the customer does not need to be so high. E-commerce focuses on reducing the “click to knock” costs. Pretty clever really.

Cities with ports and that are State shipping hubs will be the focus for already existing large entities (Amazon/Walmart) for conversion. On the flip side, cities that are more centered in high-density areas in states that have land available for new construction are the focus for long-term investment for the other players that are looking for new revenue streams combining distribution, leased retail, and multi-family.

Our world is changing every day. There is no doubt.

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