Businesses face new challenges and opportunities as demand for industrial facilities grows.
The future of leasing in this industry is uncertain due to the never-ending change experienced in the industry.
Only a few companies that can manage this change and seize the opportunities it presents will be able to thrive.
The goal of this guide is to provide you with insights and guidance on best practices and key trends shaping industrial facility leasing in the United States.
You’ll learn about the challenges and opportunities that businesses face, as well as the strategies and tools you’ll need to succeed in this dynamic industry, through a review of industry data and insights.
WHAT ARE INDUSTRIAL FACILITIES
Industrial facilities must be explained in the context of this guide for you to get the most out of it. Industrial facilities are physical spaces designed and built for industrial purposes such as manufacturing, processing, storage, distribution, and research and development.
These facilities are usually quite large, spanning several acres, and can range from small workshops to massive manufacturing plants.
THE IMPACT OF TECHNOLOGY ON LEASING INDUSTRIAL FACILITIES
Technology has had a significant impact on the leasing of industrial facilities in the United States in recent years.
The adoption of new technologies has resulted in significant changes in the way businesses operate, which has impacted their leasing requirements.
The following are some impacts of technology on leasing industrial facilities.
Increased demand for adaptable workspaces
The increased demand for flexible spaces is one of the most significant effects of technology on industrial facility leasing.
Technological advancements have enabled businesses to operate with greater agility and flexibility, resulting in an increased demand for industrial spaces that can be easily adapted to changing needs.
Businesses, for example, may need to quickly expand or contract their operations in response to changing market conditions, and flexible leasing arrangements can provide the necessary flexibility.
According to CBRE, a leading commercial real estate services firm, the demand for flexible industrial spaces has increased in recent years.
Flexible industrial spaces made up 3% of the total industrial real estate market in the United States in 2020, and this figure is expected to rise to 13% by 2025.
The COVID-19 pandemic has also accelerated the adoption of flexible leasing arrangements as businesses seek to mitigate risk while maintaining agility, according to the report.
Integration of technology into industrial facilities
The incorporation of technology into facilities is another impact of technology on industrial facility leasing.
Businesses are increasingly seeking industrial spaces that are outfitted with cutting-edge technology to help them operate more efficiently and effectively.
Businesses, for example, may require high-speed internet connectivity, advanced security systems, or automated equipment.
According to a JLL report, a leading commercial real estate services company, technology integration into industrial facilities is a growing trend in the United States.
According to the report, advanced technology is becoming a key differentiator for industrial spaces, with businesses willing to pay a premium for facilities outfitted with cutting-edge technology.
The report states that a logistics provider paid a premium of $1 per square foot per month for a facility with automated material handling systems.
Robotics and automation
Automation and robotics are two major technological advancements that have had an impact on industrial facility leasing.
Automation and robotics have transformed the operations of warehouses and distribution centers, reducing the need for human labor while increasing efficiency.
According to a CBRE report, the adoption of automation in warehouses increased by 6% between 2019 and 2020, and the trend is expected to continue. As a result, there is an increasing demand for industrial facilities designed to accommodate automation and robotics.
For example, Amazon, the world’s largest online retailer, has made significant investments in automation and robotics to increase efficiency and lower costs.
Layout and Design
Technology has also influenced the design and layout of industrial facilities. To accommodate the growing use of automation and robotics, facilities are designed with higher ceilings, wider aisles, and larger bays.
Tesla’s Gigafactory in Nevada, for example, is a massive industrial facility with over 5 million square feet of space that was designed with high ceilings and wide aisles to accommodate the large robots used in the manufacturing process.
3D Printing
3D printing is another technology that is influencing industrial leasing. 3D printing enables the production of complex and customized parts and products with high precision.
Because parts and products are created on demand, this technology has the potential to reduce the need for traditional manufacturing facilities and warehouses.
GE Aviation, for example, has been using 3D printing to manufacture parts for their plane engines. This has allowed them to reduce the number of suppliers they require while also shortening part lead times.
As a result, they have been able to reduce their inventory levels as well as the amount of warehouse space they require.
Virtual and Augmented Reality
Virtual reality (VR) and augmented reality (AR) are also having an impact on industrial leasing. Immersive experiences enabled by these technologies can be used for training, product design, and marketing.
Ford, for example, has used virtual reality technology to design and test their vehicles. They created a virtual environment in which they could simulate driving conditions.
Aside from these trends, technology is altering the way industrial facilities are marketed and leased. Online platforms like Blitz IRE, LoopNet, and CoStar make it easier for you to find and lease industrial space.
These platforms provide detailed information about available properties, such as floor plans, photos, and pricing, allowing you to make more informed leasing decisions.
THE ROLE OF SUSTAINABILITY AND ENVIRONMENTALLY-FRIENDLY PRACTICES
Sustainability and environmentally friendly practices have become increasingly important considerations in industrial facility leasing in the United States in recent years.
Companies are becoming more aware of the importance of reducing their environmental footprint and are looking for facilities that can assist them in meeting their sustainability objectives.
The following are some environmentally friendly and sustainable practices in industrial facility leasing in the United States.
Demand for sustainable facilities
As companies seek to reduce their environmental impact and meet their sustainability goals, there is a growing demand for sustainable industrial facilities in the United States.
According to a recent CBRE Group survey, 84% of respondents consider sustainability when leasing industrial facilities. Furthermore, 45% said they would be willing to pay a premium for a sustainable facility.
Energy Efficiency
Energy efficiency is one of the most important factors in developing sustainable industrial facilities. Companies can reduce their energy consumption and carbon footprint by using energy-efficient lighting, heating, and cooling systems.
The Prologis Georgetown Crossroads facility in Seattle, Washington, for example, is a LEED Platinum-certified facility that uses energy-efficient lighting and HVAC systems, as well as a rooftop solar panel array, to reduce energy consumption by 75% compared to a traditional facility.
Water Conservation
Water conservation is another important consideration in sustainable industrial facilities. Businesses can reduce their water consumption by installing low-flow toilets and faucets, as well as rainwater harvesting systems.
Whirlpool Corporation’s manufacturing facility in Cleveland, Tennessee, for example, uses rainwater harvesting to cut water consumption by 5 million gallons per year.
Waste Reduction
Waste reduction is another important component of sustainable industrial facilities. Companies can reduce the amount of waste they generate by implementing recycling and composting programs.
BMW’s manufacturing plant in Spartanburg, South Carolina, for example, has implemented a recycling program that has reduced landfill waste by 96%.
Renewable Energy
Another important consideration in developing sustainable industrial facilities is using renewable energy sources. Companies can power their facilities with solar panels, wind turbines, and other renewable energy sources.
The IKEA distribution center in Perryville, Maryland, for example, is powered by a 2.6 MW solar array that meets 60% of the facility’s annual energy needs.
Green Buiding Certifications
Green building certifications, such as LEED and Energy Star, are becoming increasingly important in the leasing of industrial facilities in the United States. These certifications provide third-party verification that a facility meets specific sustainability standards.
For example, the previously mentioned Prologis Georgetown Crossroads facility is LEED Platinum-certified, the highest level of certification available from the US Green Building Council (USGBC).
Green buildings offer numerous benefits to tenants and property owners, including reduced energy costs, improved indoor air quality, and increased employee productivity.
According to the U.S. Green Building Council (USGBC), green buildings use 25% less energy, 11% less water, and emit 34% less carbon dioxide than traditional buildings.
Also, green buildings typically have better indoor air quality due to using low-emitting materials, improved ventilation, and better humidity control. This leads to healthier employees and can reduce sick days.
Government Incentives
Finally, government incentives are helping to promote sustainability and environmentally friendly practices in the leasing of industrial facilities in the United States.
Many states and municipalities provide tax breaks and other benefits to businesses that invest in environmentally friendly facilities.
For example, the state of New York provides tax breaks to businesses that invest in renewable energy and sustainable infrastructure.
THE IMPACT OF BIG DATA AND ANALYTICS
Big data and analytics have had a significant impact on leasing industrial facilities in the United States. With the explosion of digital technology and the rise of the Internet of Things (IoT), there has been an exponential increase in the amount of data generated by businesses across industries.
The real estate sector is no exception, and the ability to collect, process, and analyze vast amounts of data has transformed the way companies approach leasing decisions for industrial facilities.
Here are some examples of how big data and analytics are influencing industrial facility leasing.
Enhanced Market Insights
One of the key ways in which big data and analytics have impacted the industrial leasing market is by providing a more granular understanding of supply and demand dynamics at the local level.
By analyzing data on market trends, pricing, vacancy rates, and tenant demographics, real estate professionals can gain a better understanding of the specific factors driving demand for industrial space in different locations.
This can help them identify areas of high growth potential and make more informed decisions about where to invest in new facilities or lease existing ones.
For example, in the Midwest, the demand for logistics and distribution facilities has been fueled by the growth of e-commerce and the need for faster delivery times.
By analyzing data on consumer buying habits, transportation routes, and regional economic indicators, real estate professionals can identify the most promising locations for new logistics facilities and negotiate leases with confidence.
Precise Asset Management
Another way in which big data and analytics have impacted the industrial leasing market is by enabling more precise asset management.
By collecting and analyzing data on building performance, energy usage, and tenant behavior, property managers can optimize building operations and make informed decisions about maintenance and upgrades.
This can help improve tenant satisfaction, reduce operating costs, and increase the overall value of the property.
Marketing
In addition to improving asset management and leasing decisions, big data and analytics have also had a profound impact on the way that industrial properties are marketed and leased.
With the rise of digital marketing channels and the ability to target specific audiences with precision, real estate professionals can leverage data to create more effective marketing campaigns and reach potential tenants more efficiently.
THE BENEFITS OF OUTSOURCING AND STRATEGIC PARTNERSHIP
Outsourcing and strategic partnerships are becoming increasingly important In the leasing of industrial facilities in the United States.
Companies are realizing the value of outsourcing specific functions and forming strategic alliances with facility management companies to improve efficiency, reduce costs, and increase flexibility.
The following are some advantages of outsourcing and strategic partnerships in industrial facility leasing in the United States.
Cost savings
For companies leasing industrial facilities, outsourcing and strategic partnerships can result in significant cost savings. Companies can reduce labor costs and save money on equipment and supplies by outsourcing certain functions, such as maintenance or security.
According to a Deloitte study, outsourcing can result in cost savings of up to 40%. Furthermore, strategic partnerships can provide access to shared resources and economies of scale, which can help to reduce costs even further.
Increased Efficiency
Outsourcing and strategic partnerships can also lead to greater efficiency in leasing industrial facilities. Facility management firms specialize in managing and maintaining industrial facilities, and they can often do so more efficiently than in-house teams.
Flexibility
Outsourcing and strategic partnerships can provide companies with greater leasing flexibility.
Companies can focus on their core business activities and respond to changing market conditions more quickly by outsourcing certain functions.
Furthermore, strategic partnerships can provide companies with access to a broader range of facilities, allowing them to expand or contract their operations as needed.
Expertise
Facility management companies have experience managing and maintaining industrial facilities and can offer valuable insights and advice to companies leasing these facilities.
CBRE, a global real estate services and facility management firm, for example, provides data and analytics to clients to help them make informed decisions about leasing industrial facilities.
Risk management
Outsourcing and strategic partnerships can also assist businesses in risk management when leasing industrial facilities. Facility management companies can help businesses protect their assets and mitigate risk by providing security services, emergency response plans, and other risk management solutions.
Sustainability
Outsourcing and strategic partnerships can also help promote sustainability when leasing industrial facilities. Facility management companies can help businesses reduce their environmental footprint and achieve their sustainability goals by providing expertise and resources.
JLL, a global real estate services and facility management firm, for example, has a sustainability team that assists clients in improving the sustainability of their facilities.
Innovation
Facility management companies can also provide access to the most recent technologies and innovations in industrial facility leasing. Prologis, for example, has developed a variety of innovative technologies to improve the efficiency and productivity of its facilities, such as automated material handling systems and advanced robotics.
FINAL THOUGHT
The leasing of industrial facilities in the United States is undergoing unprecedented change and new trends. Companies that can use these changes and trends to their advantage will be the ones to lead their industries.
In this guide, we’ve gone over the most common industrial facility leasing practices and trends in depth. Adopting anyone you find valuable and viable will allow you to stay ahead of your competitors in your industry.
If you want to lease an industrial facility in Wisconsin or Ohio, call or send an email to our Licensed Professional Agents for FREE. They’ll walk you through the important steps you need to take and ensure you get the most out of your lease. Also, for a limited time, you can download our complete step-by-step guide to leasing an industrial facility in the United States in 2023 for FREE.
