As consumption habits change, what trends will drive the future of logistics real estate?

• Potential need for shared/collaborative work;

• Flexibility of commercial terms with developers and owners;

• Convergence of emerging technologies, mechanization and automation.

The adoption of automation has changed the design of warehouses and distribution centers, increasing internal headroom heights and upgrading ground load capacity are becoming more common. As a fundamental way of measuring the overall cost-effectiveness of logistics, maximizing the use of expensive space within warehouses is an important goal and a driving factor behind this trend. Several warehouse developers have now raised the net height requirement from 9 meters a decade ago to 10.5 meters, which is high enough to support efficient shelf layout and increased pallet storage solutions.

This design increases the storage density and reduces the internal travel distance, greatly saving operating costs, and also simplifies the order sorting process.

Other improvements in the warehouse and distribution center's architectural design include the adoption of a 2:1 building layout ratio (aspect ratio), the addition of access doors and recessed platforms, the proximity of staff facilities to operations/work areas, the use of one-way traffic, and the upgrading of material handling equipment. Design optimization and automation of warehousing and distribution facilities reduce labor costs and energy consumption, further saving businesses on shipping costs to consumers.

3.3 Geographical Location

In addition to incorporating the best design and technology elements into logistics operations and asset functions, companies also need to strategically consider the geographical location and configuration of warehouse access and fulfillment centers to support an efficient and effective supply chain network. The location of warehouses and distribution centers is critical to the efficiency of the supply chain, so it is important to consider the proximity of these properties to supply and demand nodes related to supply chain hubs and requirements, ensuring a smoother and more efficient flow of goods during in-and-out transportation operations.

However, the main issue is whether the warehouses and distribution centers are close enough to the consumers for the fastest product delivery. Population determines the location of distribution and consolidation centers because it represents the concentration of end customers. Behind the site selection is the need to reduce transportation costs, especially the last mile delivery, which usually accounts for the largest portion of the total logistics cost. As a result, warehouse owners serving densely populated urban centers are considering moving closer to their end customers to avoid long-distance transportation and increasing traffic congestion, while also being close to major logistics hubs to achieve economies of scale.

3.4 Proximity to major infrastructure

Locating distribution facilities close to infrastructure such as ports, railways and roads remains a key element in building efficient supply chains and ensuring timely movement of goods between sources of production, consumption destinations and distribution centres. Despite the growth in the use of rail infrastructure, trucks still account for the largest volume of freight moving outward from port (and airport) facilities.

From distribution centers to fulfillment centers and consumers, good road connectivity is also critical for the efficient flow of goods. Therefore, for retailers looking for new warehouse facilities and distribution centers, the location of road infrastructure will continue to be a target for them.

3.5 Technology

Adaptability is the key to ensure that logistics real estate keeps pace with The Times. The ability of logistics properties to effectively adapt to current and future technological developments depends on the quality of backbone services provided to tenants. Both property design and infrastructure need to be integrated with the technology adopted by tenants to get products to end consumers quickly and efficiently. The coronavirus crisis has forced companies to accelerate their maturation, which could translate into increased efficiency and responsiveness. Proactive and early deployment of new technologies can bring significant benefits to owners and tenants of logistics properties. To maximize operational efficiency and effectiveness, it is important to understand the underlying and emerging technologies that will shape the future logistics real estate landscape and to assess the suitability of their adoption.

3.6 Warehouse Automation

In addition to the service, efficiency and other issues prevalent in the operating environment of enterprise warehouses, the increasing complexity of these warehouses is also a challenge. Automation is on the horizon, and warehouses are looking to dramatically improve safety, control, accuracy, productivity, predictability, and space efficiency. Keeping human intervention to a minimum is a trend in the handling of goods in warehouses, with automation facilitating a seamless process from purchase to shipment.

Automation is the solution to the transformation of warehouse operations, which can exponentially increase the efficiency of manual and repetitive tasks. Automation systems and options are diverse, but they all share a mission to simplify and transform today's most labor-intensive activities, such as sorting and packaging.