Yesterday I sat in on a panel discussion covering the evolution of warehouse and distribution real estate that revealed some compelling findings of a recent NAIOP Research Foundation report. There were three immediate themes noticed by industry researchers:

  1. Fully autonomous and integrated real estate reigns top.

Studies identified 4,000 robotic warehouses operating in 2018. Not surprisingly, there are 50,000 projected to be active in 2025. The introduction of automated storage and retrieval systems has major implications for warehouse spaces, and the more flexible to these technologies a space is, the more attractive they are to tenants and landlords seeking the asset class. One example of robotic emerging technology was a humanoid robot that splits pallets, reorganizes them, and places boxes on conveyers. Another was an automated grid packing system that is fully digitized without human interaction. Paired with some of the autonomous truck and drone functionalities that are developing, real estate teams are placing buildings in spaces we couldn’t have envisioned possible before.

2. Real estate is getting smarter.

The mass amounts of data that we’re privy to is creating an interesting environment to make real estate more suited to its usage. One of the speakers shared that 90% of the data we have available today has come to light within the past few years. In the location analysis decision-making process, CRE teams are layering immense amounts of data to optimize our decisions. Some examples include prototyping tools available to determine the best usage for a site. This can be used to analyze where to drop certain warehouses based on transportation access, cap rates on the building, etc. Another example highlighted site planning platforms such as Space Maker, recently acquired by AutoDesk. There are even automated underwriting tools on projects available. Due to the availability of data coupled with increases in technology, operations of buildings are changing and real estate is getting much smarter than we’ve ever known.

3. Blurred lines: The definition of mixed-use is continuously being reconfigured.

NAIOP explained countless assets being reconfigured to accommodate warehouses (grocery stores, highly-dense and underutilized retail in urban environments, etc.) The concept of a “Ware-Room” has been an attractive space for organizations like Pea Pod, or other e-commerce firms seeking last touch distribution in a specific market. It seems the convergence of usages have appeared out of necessity, but also opportunity. With the development of additive printing and manufacturing of buildings, inventory will no longer be a fixed concept. Strict definitions of mixed-use no longer apply – and soon, completely new warehouse product types will arise that haven’t ever been considered. The recent trend is that every aspect of real estate has to be reinvented, and the push is for entrepreneurs to figure out how to make it feasible.

Being on the ground to deploy these technologies, speakers from Prologis and Bridge Development Partners expanded on the real applications. To say the least, the outlook is certainly exciting – especially for New Jersey and Pennsylvania markets.