How Modern Distribution Centers Need to Adapt to the Needs of e-Commerce
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Demand for "big box" retail space is waning as consumers shift toward online shopping, but logistic real estate—warehouses, distribution facilities, and fulfillment centers—is on the rise.
Given the need for quicker delivery times and lower transportation costs, fulfillment facilities in close proximity to higher-density population centers will be in greater demand, and will command higher net rental rates.
However, beyond location, these properties also need to be equipped for the challenge of handling thousands of frequent deliveries of small individual parcels. These may be delivered directly to the consumer from a large distribution center or via a "last mile" property.
With the shifts in consumer retail patterns in mind, today's e-commerce distribution centers look, feel, and operate completely differently than the warehouses of the past. Here's a look at some of the key features a modern warehouse should include in order to accommodate consumers' new shopping habits.
Building size: Online shopping and consumers' demand for swift delivery have pushed the size of e-commerce buildings towards one million square feet or more. The need to be larger is especially true for regional centers located further away from cities. Last-mile facilities located in urban areas are often much smaller, measuring 200,000 square feet or less.
Building shape: While a lot's configuration and layout will impact building shape, a rectangular shape is ideal for e-commerce distribution facilities with building depths under 300 feet for single load design.
Ceiling height: The higher, the better. Most new centers are constructed with 36-foot or 40-foot clearances, but depending on the equipment utilized, some ceilings can be up to 60- to 70-feet-high. Higher ceilings allow for multiple mezzanine decks, thus maximizing floor space.
Warehouse floor: The standard is eight-inch reinforced concrete slab on grade finished with filled saw cuts, traprock hardener and Ashford sealer.
Fire protection: Ceiling-mounted ESFR (“Early Suppression, Fast Response") sprinklers are the standard in warehouses.
Roofing system: EPDM (rubber/black) roofing, TPO (plastic/white) roofing, and built-up roofing systems are common choices, usually depending on the climate and the size of the building.
Warehouse lighting: LED lighting is becoming a standard in all new construction, utilizing 30-foot candles in warehouse spaces and 70-foot candles in office areas.
Column spacing/bay size: We are now seeing wider bays. There is no standard width, but it seems that 50- by 40-feet works well.
Truck-level doors: Loading dock doors usually measure nine-by-ten feet, with 27,500-pound-capacity mechanical dock levelers complete with fixed-head door sealers, mechanical truck restraints, and dock lights. A higher ratio of truck-level doors is also necessary—the old rule of thumb of one door per 10,000 square feet doesn't work anymore.
Fiber optic: Fiber optic lines for connectivity is now standard.
Technology: Automation systems are present everywhere, from Amazon robots driving entire racks through the warehouse to modern conveyors and multi-level picking systems. The warehouse infrastructure needs to support all this automation and supporting technology.
People load: Large Amazon distribution centers now employ over 800 to 1,000 people, so there is a need for larger amenities like stronger HVAC systems, employee break rooms, and changing and washroom facilities.
Car parking: Due to the large number of employees now staffed at these facilities, which increases during peak season, having enough parking is very important.
Trailer parking: The need for trailer parking is increasing.
Concrete dolly pads: Concrete pads are easy to maintain and durable.
Security: Properties are secured with fencing, gates and dock locks.
Driven by e-commerce, modern distribution centers are becoming bigger, taller and more complex than ever. Developers continue to construct and design space suitable for these types of occupiers, with much of the inventory pre-leased in advance. Users will look to find space that can handle the increasing demand on shipping, logistics, delivery, and returns. Once they've optimized for location, demand, labor pool, and transportation costs, they'll look to maximize efficiencies within the layouts and buildings themselves.
About the Author: Goran Brelih
Goran Brelih is a Senior Vice President for Cushman & Wakefield ULC in the Greater Toronto Area. He has extensive market knowledge and experience and expertise in industrial sales and leasing, design-build, and land development. Over the past 27 years, he has been involved in the lease or sale of approximately 25.7 million square feet of industrial space, valued in excess of $1.6 billion dollars while averaging between 40 and 50 transactions per year.