Industrial market undergoes fundamental changes

Industrial market undergoes fundamental changes – Review & Forecast

Brian Knowles

Today, the industrial real estate business is driven by logistics on all sides; ownership, developer and tenant.

Two-thirds of operating costs for businesses is not the rent. And the evolution of the distribution center is a direct result of clients’ need to reduce operating costs in a global economy. ESRF sprinklers, cross dock loading, on-site trailer parking, high ceilings; these are all ways developers are satisfying the tenant’s hunger for efficiency. The industrial facility; not just transportation, labor, etc.–has become key to increased profits for many companies.

When looking for properties to house their distribution operations, firms have become more sophisticated and knowledgeable about what criteria must be met to best serve their distribution and warehouse needs. Rather than asking, “What space is available in the marketplace?”, users are asking themselves, “What is our business plan and how can we utilize our facilities to execute this plan?”.

The main goal of industrial users today is to find the quickest and most efficient way to deliver finished goods to the end user. The maximum speed and efficiency will cut costs and maximize profits. The way to achieve this, surprisingly enough, lies in the way the distribution company operates and uses its facilities.

Some of the important criteria for selecting an industrial facility in today’s marketplace include:

* Where is the final destination of your product? Your new facility needs to be ideally located for your business. If your product requires ground shipping, look at the burgeoning Exit 8A marketplace in Middlesex County, offering convenience to many of the state’s highways and interstates. For distribution via air and water, choose a port location convenient to Newark Liberty International Airport and Port Elizabeth.

* What are your product storage requirements? Industrial facility users are making their operations more cost effective by decreasing space needed for storage and more effectively using building heights rather than widths; you don’t pay for height. Ideal facilities will have 28′ to 38′ clear ceiling heights.

* What are your operating space needs? Determine your material handling systems and the space they will require. Facilities today offer tenants numerous amenities that are beneficial to their operational needs, such as ESFR sprinkler systems, which can be used in narrower aisles and allow use of different types of racking systems; maximum high bay storage which results in speedier product deliver and lower labor costs as well as more efficient use of warehouse space; and cross dock loading options, which allow for speedier product delivery and reduction of labor costs.

An example of a client utilizing CB Richard Ellis’ expert advisory services is the recent lease concluded for FNS Logistics Service Inc. at 112 Melrich Road in South Brunswick, New Jersey. After reviewing its business plan, FNS Logistics called upon our firm’s industrial services advisory team to find them a facility that best fit its operational requirements including speed to clients, maximum security and space efficiency, among others.

After a very focused search, 112 Melrich Road was determined to offer FNS Logistics a facility that increased its efficiency while reducing operating costs. The logistics company will utilize the entire 245,528 square foot industrial facility for warehousing and distribution purposes.

The overall effect of logistics and advisory services in the industrial marketplace has revolutionized the industry by saving clients more money through operating efficiencies. By reviewing their business plan, present and future, and determining financial parameters and bottom line objectives and operational needs, industrial users are increasingly gaining a competitive edge in their respective industries.

No two clients have the same requirement. Each has a unique set of logistical circumstances that leads to a different real estate solution; it’s more than just size and location.

COPYRIGHT 2004 Hagedorn Publication

COPYRIGHT 2004 Gale Group