Thanks in large part to the consumer demand for online ordering, the United States industrial real estate market continues to boom. Investors have noticed, with some of the larger players hitting heavy acquisition mode as the market battles a supply and demand crunch.

Trends in United States industrial real estate

With demand strong, developers are looking for innovative solutions to solve the crunch. From CBRE’s Going Up: Vertical Solutions in Industrial & Logistics report:

U.S. industrial real estate demand has outpaced supply for 32 consecutive quarters, largely the result of rapid e-commerce growth. With consumers expecting faster delivery times, there’s a looming shortage of urban infill sites for new “last-mile” delivery and a budding trend of multistory warehouse development. The average land price for single-story warehouse development in the U.S. has doubled in the past five years to $30 per buildable sq. ft. Multistory warehouses are more common in densely populated Asian and European markets where, land prices are at least two to three times higher than in the U.S.

The report cites that at least five multistory industrial properties are under development in the U.S., and successful implementation will likely set an example for future development. The trend is more likely to take place in densely populated areas, as truck sizes are much larger in the U.S. than those for their Asian and European counterparts.

Design opportunities

Aside from the desire to build up, building outward has been ongoing. Buildings, where possible, are being built to far larger sizes, as companies such as Amazon continue to announce the opening of mammoth buildings. This not only presents opportunities for the technology and automation disruptions to speed delivery logistics, but design of the buildings themselves is looking to break out from the basic, warehouse-type setting into buildings that have amenities to appeal to the end-user, as labour shortages become evident.

NAIOP, in an interview with Powers Brown Architecture Principal Nazir Khalfe, AIA, RIBA, RD, shared some of his insights:

Even in warehouse buildings, Khalfe is seeing a demand for traditionally office-like amenities, including gyms, game rooms, upscale cafes and walking paths. Employers are looking to provide a work/life balance to attract and retain talent, especially after investing in workers’ often expensive training and specialization.

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