REBusinessOnline

A New Era for Industrial Design

Hays-Logistics-Center-Texas

Strong demand for industrial space is pushing developers to undertake speculative projects like Hays Commerce Center in metro Austin. Hillwood and HPI are co-developing the facility.

Demand for industrial space is soaring and the growth of e-commerce has opened the doors for more competitors to enter the freight and logistics spaces. In addition, the latest data from the Bureau of Labor Statistics (BLS) notes that year-to-date, the United States has added 200,000 new positions in the manufacturing sector, greatly increasing the demand for new industrial space.

The advent of new technology is changing the face of the sector’s day-to-day operations. The rising influence of cloud computing and other forms of software that track inventories and model ideal production rates allow for more seamless manufacturing. Automated racking and shelving systems have increased the amount of vertical storage space available to operators and helped get product out the door with greater efficiency. These innovations have yet to significantly eat into industrial job growth, but they are already impacting design trends for new projects.

Michael Scheurich, Arch-Con

“At this point we are only seeing a minor impact from automation, but it’s clearly present,” says Michael Scheurich, CEO of Arch-Con Construction, a general contracting firm with offices in Dallas and Houston. “Developers are figuring on smaller aisles between racking for conveyors and automated pickup equipment. This allows them to squeeze in more racks and not be limited by the size of their forklifts.”

Consequently, as a result of e-commerce, manufacturing job growth and new technology, industrial developers are seeing strong rent growth on new facilities and rampant pricing increases on stabilized assets. But they also face ever-rising land and construction costs, which can be major hurdles, especially in the design phase.

“Industrial project variables are more site-driven than any other project type,” says Dan Grant, vice president at Dallas-based civil engineering firm Kimley-Horn & Associates. “Designing improvements for complex sites that fit development budgets is the biggest challenge in today’s market.”

Dan Grant, Kimley-Horn & Associates

Grant adds that ideal building sites are overpriced due to strong demand and often carry a cost of construction that either compromises the site function or makes the project financially unfeasible.

Industrial developers, architects and general contractors are all looking at new design features and layouts to help save money while still offering a property that appeals to a broad segment of the market. Above all else, these facilities must be able to manufacture, store and/or distribute more product at faster rates than ever before.

Higher Clear Heights

Whether the goal is to maximize inventory storage or to install heavier equipment, today’s industrial users often require ceiling heights between 30 and 40 feet in their facilities. This requirement is a function of both the need for housing more heavy-duty equipment for producing more goods, as well as for more vertical storage space.

Designing a property with higher clear heights from the outset is cheaper than later expanding it. But implementing this feature is not without its challenges.

“Higher clear heights present design challenges in terms of exit distance and fire sprinkler design,” says Scheurich of Arch-Con. “In addition, the height of the top of the steel determines what sprinkler heads can be used, which impacts your site water pressure, which can dictate whether you need a storage tank. All of these items add to the cost of developing the building.”

Parc-Air-59-Houston

Parc Air 59, a facility under construction in metro Houston, showcases modern industrial design trends via 28- and 32-foot clear heights and 210-foot truck court depths.

Another issue that can result from stacking product higher and investing in bulkier machinery includes increased pressure on buildings’ floor plates. Some developers are simply expanding the size of the slabs to offset the added pressure. But that’s a sure-fire way to jack up construction costs.

To balance the expenses with tenants’ needs, architects and engineers need an accurate measure of the weight of the inventory or machinery. Consequently, it’s often easier to reconcile costs to benefits when doing build-to-suit projects, wherein the user’s requirements are better known and established.

Syed Ahmed, GSR Andrade

“With speculative projects, the added costs of using a thicker, more reinforced slab drives up costs on the front end, thereby causing rents to go up,” says Syed Ahmed, an associate at Dallas-based architecture firm GSR Andrade. “It’s definitely easier with build-to-suits because we have the information up front and can make accommodations while designing the shell of the building.”

Overall industrial growth is contributing to demand for higher clear heights, but that isn’t the only piece of the puzzle. New industrial projects need to be located near major transportation networks, meaning they’re never too far removed from an urban setting. This basic requirement for an industrial development also impacts design in multiple ways.

“The exterior of the building drives a lot of the design, starting with good access, entrance and exit points,” says Blake Kendrick, managing director and partner at Stream Realty Partners. “If you have multiple tenants, you want each space to act as a standalone facility that is fully secured with controlled access and entry/exit points.”

Blake Kendrick, Stream Realty Partners

Land prices tend to escalate as a project moves closer to an urban core. In some cases, the high cost of acquiring and developing more urban land necessitates a different approach: going vertical. E-commerce users in particular are embracing this trend, frequently implementing mezzanine space and creating multiple levels within their warehouses.

Cross-Dock Craze

The success of e-commerce is inextricably linked to efficient delivery of products. Cross-dock facilities allow for products to be directly transferred from an inbound dock to an outbound dock with minimal layover.

Cross-docking is particularly desirable for larger facilities in today’s market, because this configuration enables more flexibility within the space, according to Tony Creme, senior vice president at Hillwood. All of the Dallas-based industrial developer’s projects that total 300,000 or more square feet are cross-dock facilities.

“Cross-dock has become the standard design for larger bulk warehouses and distribution centers,” says Creme. “Particularly if you’re building a project on spec, using a cross-dock configuration gives you more opportunities to divide the space and market the property to different kinds of users.”

Tony Creme, Hillwood

A cross-dock configuration also works well for e-commerce users because those facilities tend to have a high number of employees on-site. Employee parking space and loading areas need to be kept distinctly separate, says Ahmed of GSR Andrade.

“True segregation between cars and trucks is a common request among today’s users,” he says. “Keeping the truck traffic flowing without having to deal with cars obstructing traffic as they traverse the facility helps keep the operation running efficiently.”

Truck Court Confusion

The depths of truck courts represents another interesting issue in the field of industrial design — and one wherein the close relationship between design, e-commerce and technological innovation is quite visible.

On one hand, some developers are expanding the depths of truck courts in anticipation of longer trailers entering the market. On the flip side, the introduction of self-driving trucks has some builders shrinking their truck courts depths.

The assumption behind more shallow truck courts is that with autonomous drivers, the human error factor will be removed from the equation and trucks will need less room to maneuver. In theory, precise truck maneuvering not only allows more trucks into the court, but it also enables users to utilize more dock positions because each truck is precisely lined up with one dock instead of multiple docks.

E-commerce tenants and their high number of employees often illustrate this trend in action, says Creme of Hillwood.

“With facilities with lots of employees, you often have to put the parking on the long side of the building where the truck court would normally be,” he notes. “But the tenant only needs doors on one side. So you design it as a cross-dock with one side for parking, and once the e-commerce user leaves, you can repurpose that space into a truck court.”

Southlink-Logistics-Center-Dallas

At 50 feet tall and featuring a siphonic roof drain system, Arch-Con’s 1 million-square-foot Southlink Logistics Center in Dallas has been designed with utility consumption in mind.

The depths of truck courts are also subject to regulation. According to Ahmed of GSR Andrade, in some cases, certain municipalities have begun to require that building façades facing major roads have protrusions.

These protrusions are meant to enhance the aesthetic appeal of the building, but minimize the space that trucks have to maneuver, which can slow operations considerably. The degree to which truck court depths can be altered to circumvent this requirement often varies from one municipality to the next.

Spotlight on Utilities

As the presence of automated labor and complex machinery slowly rises, users’ power bills rapidly increase. As a result, developers and operators are placing a heightened emphasis on implementing sustainable utility systems.

In addition, technology and e-commerce are beginning to touch the industrial operations of companies that provide perishable items, namely food. To this end, facilities must introduce climate-controlling mechanisms to preserve both their product and the shelf lives of their equipment. Thicker insulation in the roofs and walls is becoming more common as a means of controlling temperature without consuming tons of power.

In addition, industrial developers are increasingly adding early suppression, fast-response (ESFR) sprinkler systems to their facilities. These systems are relatively cost-effective because they eliminate the need for in-rack sprinkler protection. But they also require stronger water pressure and a reliable energy source to power them.

Taylor Williams

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