We seldom think about the many people, processes and properties that make up the supply chain that delivers goods and services that are so important to our everyday lives. Often described as the least glamorous sector of commercial real estate, the industrial sector is the one that perhaps has the most direct impact on all of us.
“As we continue to move to a more interdependent and competitive global economy, the industrial sector continues to adapt,” says John Jenkins, senior vice president and industrial specialist with CB Richard Ellis in Tampa. “Change occurs at many levels, but, in most every instance, it is driven to seek ever-improving, bottom-line efficiencies. It may not always be pretty, but the effectiveness of the supply chain can have a significant effect on our professional and personal lives.”
Smart Business asked Jenkins about the state of today’s industrial sector and how it will continue to change to meet our needs.
How do global factors affect today’s logistic decisions?
There is no question that the world continues to become a more interdependent marketplace. As a result, every phase of production, warehousing and distribution is continually being assessed. New economies are evolving, established ones are seeking better ways to compete and all are looking to better serve a broader base of markets. In that ever-changing process, the logistical equation is continually morphing. Positioning today to capture opportunity tomorrow is critical. Decisions at every point in the process must consider much broader implications: Where and how raw materials are shipped, who leads in technology and production, how finished goods are imported and exported, how we get to the consumer and always with price key from manufacturer to consumer.
So how do all those factors affect our local market?
Again, we go back to a system built on interdependency. The importance of connectivity to air service, working ports, rail and interstate networks are increasingly important in the local market. The proximity and quality of each of these independent, yet often interconnected, pieces is key to how effective and efficient the Tampa market can operate. Therefore, we must make smart, local decisions today that best serve our growing population yet position us beyond our state boarders. This is particularly important as a number of geographical areas compete vigorously for not only local but regional and national business. We must think globally while executing strategically in our local market. It is a very complex process that, in the end, delivers the most basic needs to sustain our way of life.
How have industrial properties changed in this equation?
The most notable physical change in new properties has been an increase in clear heights. With interior ceilings that now can exceed 30 feet, the ability to rack and subsequently store more material on a smaller floor area certainly allows for greater efficiency and helps offset the cost of occupying a new building. As in all new construction, greater care in design and construction is given to meet increasingly stringent regulatory codes to protect against inclement weather. Improved life safety systems better protect workers and more efficient lighting, roofing and even paint can improve operating efficiencies. On the exterior, design of improved truck courts can greatly enhance operations, especially with larger trucks moving greater amounts of materials.
For existing facilities, many owners/ users are making modifications at their current site to avoid any disruption in operations or work force that a potential move may generate. In some cases, specific requirements are being answered by clients choosing to have a new facility built for their defined needs. In almost all cases, the decisions are, in part, driven by the desire for greater efficiencies.
What effect is the current economy having on the industrial sector?
I think it’s clear, and it goes back to my initial comments, that we are connected beyond our own borders. As such, the effects of the challenges experienced in the global capital markets has had an effect at almost every level. The industrial sector has certainly seen a slowdown in current activity as business and personal decision are tempered with caution, therefore affecting demand up and down the supply chain. Certainly, the drastic changes in residential construction have had an effect on those industries that supplied a variety of products and services.
Remember, however, that as our population continues to grow, be it globally or nationally, the need to move even greater amounts of goods and services will always be met by the ‘Ugly Betty’ of the commercial real estate sector.
JOHN JENKINS is an industrial specialist and senior vice president with CB Richard Ellis in Tampa. Reach him at (813) 273-8438 or firstname.lastname@example.org.