Looking to the Future of Industrial Real Estate

Sponsored by Phoenix Investors

Over the past several decades, science fiction movies have featured all kinds of things once thought unimaginable, such as robots, self-driving vehicles, and fully automated factories. As we reach a point where these fantasies have become a reality, the industrial real estate sector must look toward a smarter future. This article will discuss some innovative new features found in warehouses and what property owners can do to support them. 

What Does a Smart Warehouse Look Like? 

A “smart warehouse” is so-named because it relies on artificial intelligence (AI) and machine learning (ML) software solutions, which enable the identification and correction of inefficiencies. The COVID-19 pandemic and ensuing labor shortages caused warehouse operators to innovate new ways to pick orders and get them out the door with minimal staff, which significantly advanced the use of this type of warehouse technology. To keep pace with post-pandemic volumes, some of the solutions growing in popularity for the warehouse sector include: 

• Cobots and drones. Many warehouses have implemented robotic solutions to pick items. These advanced robots leverage AI, cameras, radio-frequency identification (RFID), barcode scanners, and other capabilities to identify items and bring them to a warehouse associate for convenient packing.
• Internet of Things (IoT). IoT solutions leverage an internet connection to maintain constant communication with warehouse systems, such as the warehouse management system (WMS), enabling continuous optimization. As a result, these systems can accomplish mundane tasks very fast while mitigating the risk of human error.
• Mobility solutions. Along with robotics and IoT solutions, e-commerce businesses are smartening up their warehouses using wearable technologies and mobile device solutions to keep associates connected with the WMS and automated equipment. These technologies augment the capabilities of each warehouse worker, enabling the facility to accomplish more with a smaller staff.
• Better analytics. Through advanced analytics capabilities, smart warehouse technology monitors order processing data and machine learning to predict ebbs and flows in order volumes with a high accuracy rate. This capability enables warehouse managers to optimize labor, space, and inventory levels continually.

Building the Warehouse of the Future Starts Now 

The days of dusty old warehouses have faded as a new era of online shopping and same-day shipping dominate the market. With online sales driving unprecedented growth in warehousing, property owners must keep pace with the evolving needs of modern warehouse tenants. Whether we’re talking million-square-foot mega-fulfillment centers or 10,000-square-foot micro-fulfillment centers, the e-commerce sector will seek the following to drive efficiency: 

• Excellent connectivity. Modern businesses have moved online. As a result, these companies aren’t hosting on-site legacy software in an internal server farm anymore. Instead, these businesses need advanced connectivity to support the simultaneous use of dozens of cloud-based softwares. To appeal to this new generation of tenants, landlords must get the warehouse wired for the highest possible internet speeds. Additionally, lessees will want reliable access to other advanced connectivity services, such as Wi-Fi 6, 5G, and SD-WAN.
• Sustainability. Studies have shown that most Americans engage in sustainable behaviors at home. With 64% of American shoppers willing to spend more on sustainable brands, e-commerce tenants will increasingly pursue opportunities to lease greener warehouses. Even if implementing sustainable changes makes the cost of leasing a warehouse slightly higher, tenants know they can pass some of that cost on to the consumer.
• Higher power capabilities. Automated solutions and the Internet of Things (IoT) draw significantly more power than traditional warehouses were built to handle. Property owners hoping to appeal to e-commerce tenants must ensure that their warehouses can handle the higher power requirements of more intelligent technology solutions. To the previous point about sustainability, ensuring that power comes from renewable sources will offer an added bonus.

With this infrastructure in place, e-commerce fulfillment operations and other tech-savvy industrial tenants can lease industrial space without worrying about the property’s ability to support future needs.  

About Phoenix Investors 

Founded by Frank P. Crivello in 1994, Milwaukee-based Phoenix Investors and its affiliates (collectively “Phoenix”) are a leader in the acquisition, development, renovation, and repositioning of industrial facilities throughout the United States. Utilizing a disciplined investment approach and successful partnerships with institutional capital sources, corporations and public stakeholders, Phoenix has developed a proven track record of generating superior risk adjusted returns, while providing cost-efficient lease rates for its growing portfolio of national tenants. Its efforts inspire and drive the transformation and reinvigoration of the economic engines in the communities it serves. Phoenix continues to be defined by thoughtful relationships, sophisticated investment tools, cost efficient solutions, and a reputation for success.