July 9, 2018
There’s still time to join us for Connect Industrial in Chicago on July 11th. Leading up to the conference, Connect Media spoke with AEI Consultants’ Holly Neber to gain insights into trends driving the industrial sector, what strategies she sees developers and investors deploying, and the challenges facing the industry in our latest 3 CRE Q&A.
Q: What are the biggest trends currently impacting the industrial sector?
A: The intersection of industrial and retail is continuing to shape the sector and influence the types of properties and sites that are in high demand. Investors and E-commerce owner-users alike are continuing to pay close attention to the supply chain as they consider building features and locations.
Another significant factor influencing demand for industrial space is the cannabis industry. For example, in Colorado, where the recreational use of marijuana was deemed legal in 2012, vacancy rates have compressed, industrial properties occupied by marijuana growers are selling at premium prices, and rental rates are rising as well. These buildings are often small Class C and even Class D warehouses.
Q: What are you seeing from your clients in the industrial space in terms of development and investment?
A: Our clients are overwhelmingly targeting infill locations for last-mile retail distribution. While E-commerce has driven the development of very large distribution warehouses in areas with ample land, as consumers have increasingly come to expect same-day delivery options, many investors and users are looking for the rare available properties or developable land closer to urban cores and residential areas.
The standards of modern industrial users have changed significantly over the past 10-20 years. When identifying existing industrial buildings for acquisition, many of our clients focus on the capability of building itself to be updated and adapted. These renovations vary, but often include the addition of clear height and dock-high loading doors.
Q: What unique challenges face industrial properties or sites historically used for industrial?
A: Older industrial properties that must be heavily updated, or sites that were historically utilized for industrial uses, often have legacy environmental issues that must be remediated before the building or land can be repurposed – whether for modern industrial use or other uses altogether.
Stakeholders must understand that the process of assessment and remediation will take ample time and money, and must be considered in the overall budget of a project from the start.
That said, there are third-party experts that can assist with not only environmental clean-up, but ensure compliance with regulations, and advise on budget and community outreach.
For example, we recently assisted a Fortune 100 company in the closure, clean-up, and assessment of six acres of land that required remediation due to several decades of uranium fuel rod production and industrial plating operations. Our involvement extended beyond supervising the excavation of contaminated soil, as we also prepared relevant permits and approvals, attended public participation workshops and briefings, and ultimately increased the value of the land through stabilizing the site.
For comments, questions or concerns, please contact Dennis Kaiser