Logistics developers are building increasingly sophisticated industrial projects in reaction to developing tenant demands, such as automated warehouses and a growing concern with the working environment in tight labor markets.
As with other commercial real estate sectors, the major industrial park developers and operators are seeking third-party sustainability accreditation such as BREEAM and LEED as tenants look to save on utility costs and developers need to comply with international environmental regulations.
Rising construction and labor costs are putting upward pressure on rents, increasing the need for ever more efficient logistics facilities and property management systems.
“Unemployment remains at a historic low, pushing the economy to its limits and industrial operations are working at maximum capacity. This encourages innovation and automation of warehouse operations,” comments Cushman & Wakefield.
“We see that Central Europe is as strong as Western Europe,” says Ian Worboys, CEO of P3 Logistic Parks. The company operates in Central Europe and has been considering market entry into Hungary for some time.
“In Europe about 25% of our occupiers are in some way involved with e-commerce. With, for example, a 25,000 sqm requirement in Central Europe, we could build this within five months. BTS means the customer gets exactly what it wants. We only build class ‘A’ warehouses with top quality insulation as we are very conscious of ensuring that the costs of operators are as low as possible. This means that the building is air-tight and they are not leaking heat,” he continues.
“We are trying to make sure our buildings have all the green features and are ready for electric cars with electrical points. We are part of the UN Global Compact (UNGC), which is the world’s largest corporate sustainability initiative, and we are the first logistics developer to be part of this. This shows we are being responsible but, at the end of the day, logistics is all about saving your customer money on, for example, lighting and electricity,” Worboys adds.
Prologis has commenced construction of a 10,600 sqm speculative facility at Prologis Harbor Park. The complex will be submitted for BREEAM “Very Good” accreditation; accreditation to a third party green organization is becoming the norm for regional industrial developers and industrial park operators.
Prologis describes the complex as the first Building Information Modeling designed logistics center in CEE. The system is a 3-D model-based process that gives architectural, engineering and construction professionals the tools to more efficiently plan, design, construct and manage buildings and infrastructure.
According to Prologis, sustainable features of the development will include high graded insulated wall panels and roof systems that, together with high performance gas fired heaters, can cut heating costs by 30%. Further, energy efficient LED lighting and large skylights reduce electricity costs by 40% compared to the latest lighting standard. Smart metering will also optimize water, gas and electricity consumption in the complex.
“The importance of labor in warehouses has risen in the last decade. Access to qualified labor in the 12 European countries where Prologis operates is a key rerquirement for real estate selection. More than 150,000 people work under Prologis roofs in Europe and their environment has never been more important,” explains Prologis Research.
“A warehouse is no longer just a place for only storing goods. Higher value-added and complex activities now take place in logistics facilities, which require a much more diverse workforce than historical norms. We believe that the logistics market is on the verge of transforming the labor market. Automation/robotics impacts labor demand. This is expected to reduce some pressure for lower qualified employees, but the need for higher qualified employees will only increase. As seen in other sectors, automation/robotics does not necessarily lead to a reduced need for staff; it leads to a changing composition of the employee skillset,” Prologis adds.
Developers are competing by designing highly specified projects in reaction to changing tenant demands. CTP is now committed to developing BREEAM buildings. Two buildings at CTPark Plzeň in Czech have already received BREEAM “Very Good” certification.
The company retains responsibility for property management activities and all new BREEAM accredited buildings include in-house facility management, grid sizes of 12 by 24 meters, with 10.5 meters clear height and LED lighting, according to the developer. The usual construction period is around nine months.
Another European logistics park developer and operator, Panattoni Europe, is constructing a 45,000 sqm e-commerce logistics center for Amazon in Łódź in Poland. Panattoni is applying for BREEAM “Very Good” accreditation for the project that will include an intelligent building management system, LED lighting with motion sensors, enhanced wall and roof insulation and systems limiting water consumption.
With regard to locational issues, large land plots with access to labor markets at key public and road transportation hubs are becoming more difficult and expensive to source. A current trend in large European cities that could become evident in Hungary is the requirement for smaller urban logistics centers located within cities that facilitate shorter delivery periods.
“Access to labor is essential and availability is shaping location strategies. It has become one of the most important themes in today’s logistics markets. Logistics real estate has an opportunity to address these need by offering well-equipped warehouses in assessible locations,” said Prologis.