The increased adoption of these new technologies has changed the commercial real estate landscape in Massachusetts, especially in the fields of industrial warehousing, logistics and manufacturing.
Cushman & Wakefield’s Tech Disruptor Series tackles these challenges and provides insights into how rapid adoption of disruptive supply chain technology will affect the future of commercial real estate. The recent trend shows new facilities being constructed to meet these needs and existing facilities being refitted to attract potential tenants. But why are these new advancements causing the need for such big changes?
Take, for example, ceiling height. More than half of the existing stock of warehouses in Massachusetts have ceiling heights lower than 28 feet. In a human-centered use case, this is acceptable. However, modern automation technology coupled with the increased adoption of robots requires more vertical space than ever before. The average ceiling height for a 300,000-square-foot warehouse has increased from 25 feet to 32 feet, with 36-foot ceilings growing in popularity in order to fulfill the needs of these advancing technologies. Not to mention, the increased use of drones requires the clearance for them to fly in order to help with order fulfillment.
New technology is affecting dock layouts as well. Docking controls in the inflow or outflow of goods to a facility can be a pressure point on productivity regardless of the efficiency of the automation inside the facility. New and retrofitted properties are changing the typical row by row truck docking station design with integrated dock technologies and data capabilities. This data can be used to plan maintenance schedules based on frequency of use and provide insight into how each dock can be used more efficiently.
Dock counts have doubled in the past five years from 1/10,000 SF of warehouse area to 1/5,000 SF and in some cases even less. This is due to the two day and next day delivery that ecommerce consumers are now demanding and willing to pay a premium for. Amazon is at the forefront of this fight – currently, most trucks of packages are unloaded by hand, which Amazon hopes to change with their new patent which would use automation (and big suction cups) to complete this task. This eliminates human error, injury and reduces costs all around.
Nationally, there is a 4.8 percent vacancy rate and technology is making the industrial market even more competitive. For industrial sites in Massachusetts, there is a lack of available land space to create such big warehouses (other than those which have already been built). Since the land is so scarce, Massachusetts warehouses need to adopt these advancements in technology in order to make themselves more efficient. Across the board, investors, owners and tenants need to account for these changes in order to remain competitive in the market.
While it may seem that warehouse automation is an expensive task (with high up-front capital expenditures), the payback period for keeping up with advancements in technology is decreasing. The unemployment rate in this field being so low, coupled with the salaries increasing due to high competition for qualified workers, is greatly contributing to automations rise. Not to mention, automated warehouses run 24/7/365 and they don’t get sick or take vacations; the technology used also doesn’t require much lighting, which helps save on costs as well.
For more information on how these technologies will evolve the commercial real estate market, read Cushman & Wakefield’s Tech Disruptors and the Supply Chain report.