Industrial warehouse

The Future of Industrial Real Estate and Logistics Systems

The design and constructability of industrial projects has changed immensely over the past decade, alongside growing e-commerce demand, population density and trends like grocery delivery. Kim Snyder, president, U.S. West region at Prologis; Jinger Tapia, principal, design at Ware Malcomb; Brook Melchin, senior architect/director at Riddell Kurczaba; and Robert Murray, senior vice principal at Alston Construction, discussed emerging trends in industrial development at this week’s I.CON Virtual 2020. Their conversation addressed a range of topics including design trends in new buildings, potential models for mixed-use buildings, and adapting to autonomous vehicles and increased automation within buildings.

Building Design

Murray provided insight into recent trends in industrial buildings that are likely to continue in the near future. In general, buildings are getting taller, with 40-foot clear buildings now commonplace and 48-foot clear buildings increasingly entering the market. Taller buildings are also becoming more common in last-mile facilities located close to dense urban areas. Robotics and autostore systems are increasingly common, increasing building throughput. However, automated systems and HVAC systems also sometimes require the installation of additional sprinkler systems and have contributed to buildings’ electrical requirements. Murray observed that new buildings with automated systems frequently require the installation of three or four transformers and large backup generators to ensure that systems can remain in operation during a power outage.

Space usage at a site is also beginning to shift as many facilities, especially those in the last-mile category, increasingly accommodate additional parking for delivery vans and workers. Conventional buildings are still being built with 50-foot bays to service truck deliveries, but buildings increasingly use truck queueing systems to allow more on-site space to be devoted to parking. Murray said he has also seen a trend of moving offices to the center of a building. Buildings are increasingly being designed to accommodate different future uses of space.

Tapia also noted ways that buildings are being designed to be more flexible and identified design elements that can allow for more efficient use of space. For example, to accommodate a future change of use, designers can ensure that a wall that is initially designed for truck docking is not load-bearing so that it can be reconfigured or moved.

Tapia also outlined potential approaches to making a large buildings “more efficient on smaller acreage of land, closer in to the buyers who are looking for delivery.” These include the potential of placing loading zones in a central corridor along the middle of a building instead of at a building’s sides, and surrounding each side of a loading zone with mezzanines and vertical lifts.

Tapia and Melchin observed that there has been a recent trend toward increased building amenities and designing buildings for occupant health and wellness, a trend they expect to accelerate in the wake of COVID-19.

Tapia indicated that these trends are similar to those occurring for attracting and retaining employees at office buildings; tenants are increasingly interested in providing employees with amenities and attractive external spaces. “In years past, it was minimal landscape… now we are seeing plans on various levels of industrial to add amenity spaces and walkable paths and connecting with nature.”

Melchin said he expects that social distancing will also become a long-term design consideration, and that this will lead to a new pandemic certification for buildings that is based on a wellness framework.

Mixed-use Industrial and Autonomous Vehicles

Panelists also said they expected that technological change will lead to new building designs and logistics systems. For example, Melchin outlined a design concept for a future mixed-use vertical building that would feature retail uses on the ground floor with warehouse and distribution space above it. Lifts located in a vertical shaft in the building’s core would allow for the transportation of goods between the building’s warehouses and retailers. The building could be serviced by rail for both transit and package delivery, and could be located within an urban center. Melchin described this approach as an urban solution that would bring people to the center of cities, reducing traffic and waste associated with home delivery.

“We envisioned that rail and rail-based transit would be more rational, allowing for faster and cheaper delivery while revitalizing cities,” Melchin said.

Advances in conveyance and lift systems over the last five years would make this building possible, though Melchin observed that the introduction of new transit systems pose a more difficult challenge. Beyond the design concept that Melchin outlined, he said he expects retail stores to become increasingly experiential and serve a showroom function.

Melchin expects that the future adoption of self-driving vehicles will also lead to a range of considerations for developers, logistics firms and local governments. Melchin said he believes that the availability of autonomous personal vehicles would lead most households to retain a single autonomous vehicle, which they could use not only for transportation, but also to pick up goods remotely. For example, self-driving cars could be equipped with a refrigerated trunk that would allow them to pick up grocery orders. Owners could use these vehicles for themselves and sell their use to others to help cover the cost of the vehicles.

Melchin also said that he expects automated trucks with robots that transport goods between trucks and consumer’s homes will become common in urban areas. Between individually-owned autonomous vehicles and those owned by retailers or logistics firms, Melchin said that current delivery systems will likely only deliver between 10% and 20% of orders in the future.

The adoption of autonomous vehicles poses both technological and regulatory challenges. Melchin predicted that it will become more difficult to design autonomous vehicles that can handle last-mile delivery. Widespread adoption of autonomous vehicles also has the potential to dramatically increase traffic, since it could incentivize owners to send their vehicles on trips they would not normally make themselves in a traditional vehicle. Self-driving vehicles could also potentially bankrupt transit systems by diverting riders. Melchin said that local governments could address these challenges by regulating vehicles through tolls and penalties placed on empty vehicles.

“We need to change the traffic scenario,” he said. “There is a beautiful future with a huge reduction of vehicles on roads, but it will need to use centralized systems, such as transit, to achieve that.”

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