BY MARK B. SOLOMON, EXECUTIVE EDITOR–NEWS
THE DC VELOCITY Q&A thoughtleaders
THE TRADITIONAL WAREHOUSE AND DISTRIBUtion center is a wide, squat structure sitting amid seemingly
endless tracts of land at or near interstate highways or state
roads. Those aren’t going away, but a new type of warehouse design is muscling its way in: taller structures with a
new focus on three-dimensional (3-D) measurement that
captures the true extent of a building’s available space.
In a report issued in late March, CBRE Group Inc. said
the height of the typical U.S. warehouse had increased to
33 feet in 2016 from 24 feet in the 1960s. What’s more,
while 13. 7 billion cubic feet of U.S. warehouse space was
built from 2010 to 2016, that would be just 422.5 million square feet of space if the facilities were measured by
ground-floor area. Driving the move upward is the rapid
growth of e-commerce fulfillment networks that have led
companies to install mezzanine levels to add more human
pickers as well as a need to be closer to densely populated
urban centers where land is in short supply, prohibitively
expensive, or both.
David Egan, CBRE’s head of industrial and logistics
research for the Americas, recently spoke to Mark B.
Solomon, executive editor–news, about the trend to build
taller and to measure space through a 3-D prism, and how
this evolution in design may spur the next phase of U.S.
industrial property’s multiyear success story.
QIndustrial real estate has been on a multiyear tear. How long do you see this continuing?
AWith a growing domestic economy and e-commerce sector, demand in the near term is likely to persist. It
should slow a bit from the very strong run it had from
2013–2015, but it still will be at, or above, long-run averages. The supply side, which has been somewhat slow during
this cycle, is projected to deliver new product at, or slightly
above, the rate of demand for the first time in nearly a
decade. This will have the effect of pushing availability rates
up a bit and slowing the rate of rental growth. Overall, the
market is in a fairly mature state but still looks to be strong
in the near term.
QWhat factors would slow the market down?
David Egan, head of industrial and
logistics research for the Americas
operation of real estate giant CBRE Group,
says the future is looking up for industrial
property, literally and figuratively.
INTERVIEW WITH DAVID EGAN
Going
vertical
