Bisnow Panel Shows Confidence in Industrial Development
Before attending the Bisnow event last Thursday, I didn’t give much thought to industrial development. I would usually
concentrate on apartments, hotels, office, retail, mixed-use, etc., but after hearing the discussion of some of the key industrial development players in the Philly area, I realized that industrial development is booming and it’s a sector of the economy that must be considered by just about anybody in the building industry.
The presentation began with an introduction by Will Agate from Navy Yard Management and Development who noted that 1 in 5 jobs center around the industrial sector. The panel put together by Bisnow consisted of Benjamin Cohen from CBRE, Bo Farkas from Prologis, James Mazzarelli from Liberty Property Trust, Tim Hoffman from Duke Realty, Christopher Boyle from Drinker Biddle and Reath. They all spoke with fantastic knowledge and confidence in the industrial development sector.
When I go to panel discussions like this, I certainly listen to what each individual has to say, but mostly, I’m looking for consistencies among the speakers. I think that if several experts in a particular field can come to some consensus or agreement about a particular topic, the chances of the opinion being accurate are extremely high. This particular panel was not only consistent in thinking that industrial development will increase, but also about the reasons for the increase. They all felt that the growth in e-commerce has driven growth and will continue to drive growth in the industrial sector.
The growth of e-commerce has presented a need for distribution centers. And yes, the word Amazon was used several times throughout the presentation. But it’s not only Amazon that is fueling the construction of distribution centers. There is an across the board need for industrial space and almost every retailer is involved. One member of the panel showed a graph of the historical growth of e-commerce and then predicted that e-commerce will increase by 62% by 2016. Given that fact that we’re nearly in 2014, that is a tremendous jump.
Not only will increases in e-commerce require more industrial space, but we also have to think about how all this product will be delivered. I never really thought about all the trucking needs that will be a result of more online shopping. There was concern among the panel about whether the existing infrastructure will be able to support all the trucking along with normal traffic.
Even though we were not discussing the possibly more glamorous office buildings, hotels, or high-end residential, there was no lack of sustainability when it comes to industrial buildings. Amazon requires LEED certification on all their new buildings, with the adoption of LEED V4 there are standards that pertain specifically to warehouses and distribution centers. There is plenty of opportunity for sustainable design when it comes to a distribution center. With a very high ratio of roof space to overall square footage, solar panels and natural daylighting can provide nearly all the lighting and electricity requirements for a distribution center.
The Bisnow panel on Thursday was in no shortage of hard facts to support the claim that industrial development will grow substantially in the coming years. Plus, there are probably few that will disagree that e-commerce will continue to increase. And of course, we have to realize that warehouses and distribution centers will have to grow along with it.
Industrial construction is certainly on the rise. A more friendly business environment seems to be drawing manufacturing back to Pennsylvania. Whether the long term growth will be there is still uclear, but short term gains are apparent.