October 20, 2020
WASHINGTON, D.C. – The built environment is experiencing an unparalleled automated revolution across all commercial real estate asset classes, according to “The Evolution of the Warehouse: Trends in Technology, Design, Development and Delivery,” a new report published by the NAIOP Research Foundation.
The report was authored by Steve Weikal, lecturer, researcher and CRE Tech lead, MIT Real Estate Innovation Lab, and James Robert Scott, lead researcher, MIT Real Estate Innovation Lab.
Advancements in technology and the adoption of new applications for data analytics, ubiquitous sensors, artificial intelligence and autonomous vehicles are improving productivity and allowing for more efficient use of space, according to the report. Warehouse and distribution properties will benefit considerably from these changes.
Industrial real estate will continue to be reconfigured as a new wave of innovation responds to growing consumer demand for fast product delivery, rising land and labor costs, and the increasing complexity of logistics systems. Supply chains and the buildings on which they rely are becoming increasingly interwoven within the everyday life of cities. Technological innovation is contributing to and accelerating each of these trends.
Relatively new technologies that increase the productivity of logistics facilities, such as automated storage and retrieval systems (ASRS), have also attracted substantial investment. The continued evolution of these technologies and the emergence of new ones—from drones to autonomous vehicles—will likely contribute to more efficient and responsive supply chains and more productive industrial assets. Consumer demand for rapid delivery will continue to spur innovative approaches to distribution, such as multistory warehouses and micro-distribution centers.
The NAIOP Research Foundation commissioned the report to provide the commercial real estate development community with insight into current and future trends in building and logistics technologies and their implications for industrial real estate, including:
Advances in the automation of distribution center operations – including ASRS, autonomous guided vehicles and robots – can substantially increase a distribution facility’s throughput. Further advances will make these technologies more adaptive, productive and cost-effective.
- Data analytics and artificial intelligence (AI) will increase the efficiency of supply chains and industrial real estate. Data collected along the supply chain and from operations within logistics buildings will help developers make better locational decisions and will improve facilities’ operational performance.
- Despite increasing automation, industrial properties will continue to employ human workers. Robots, sensor networks and AI will make the workplace safer and more efficient, and will allow human workers to focus on creative problem solving.
- New technologies are facilitating the expansion of logistics operations into new spaces and blurring the line between retail and industrial real estate. Increased throughput from new technologies can make multistory warehouses and micro-distribution centers more cost-efficient and relatively compact automated storage and retrieval systems can allow retail property owners and their tenants to add logistics uses to existing buildings.
“The coronavirus pandemic has accelerated an already growing demand for industrial real estate, particularly warehouse facilities that support e-commerce delivery in both urban and suburban markets,” said Thomas J. Bisacquino, NAIOP president and CEO. “This demand is driving innovation, and critical technology improvements can improve the efficiency, responsiveness and flexibility of these logistics facilities.”
Download the NAIOP Research Foundation's complete report.
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About NAIOP: NAIOP, the Commercial Real Estate Development Association, is the leading organization for developers, owners and related professionals in office, industrial, retail and mixed-use real estate. NAIOP comprises 20,000 members in North America. NAIOP advances responsible commercial real estate development and advocates for effective public policy. For more information, visit naiop.org.