Industrial Real Estate Evolution: The Impact of E-Commerce on Warehouse Development

The explosive growth of e-commerce over the last ten years has changed many sectors, but perhaps none more than industrial property. With increasing online buying, demand for distribution centers and warehouses has exploded. The move to e-commerce has created seismic shifts in the way industrial property is built, from location planning to design elements. Dov Hertz, a veteran real estate developer, offers his insights on how this shift is revolutionizing the industrial real estate sector.

E-Commerce and the Need for Speed

One of the key drivers of the industrial real estate revolution is the requirement for shorter delivery times. Online shopping giants like Amazon have set the bar high for consumers through same-day or next-day delivery options. This has created a record demand for warehouses constructed close to population centers to accelerate the fulfillment process.

“With the expansion of e-commerce, proximity to large cities is no longer optional,” says Dov Hertz. “The demand for ‘last-mile’ facilities—those distribution centers near where consumers live—has altered the design and execution of industrial projects.”

To respond to this demand, developers are focusing on building smaller, strategically located warehouses rather than large regional hubs. Smaller warehouses get orders to customers faster and cater to the needs of e-commerce companies that require delivery times to be minimized.

Multi-Story Warehouses: The New Frontier

In highly populated cities where land is scarce, developers are turning more and more to multi-story warehouses as an option. Multi-story warehouses are allowing industrial operations to remain in urban centers where conventional, single-story buildings would be impossible to construct due to a lack of land.

“Vertical construction is the future of urban logistics,” Hertz explains. “Where land is limited, multi-story warehouses are becoming a normal component of the e-commerce supply chain.”

These high-tech buildings allow e-commerce companies to optimize space, making the most of every square foot. They can hold a lot of inventory on multiple floors while also having the support structure required to handle contemporary logistics.

Technology and Automation in Warehouse Design

With how e-commerce has evolved, so too has the technology within warehouses themselves. Warehouses are now equipped with very sophisticated automation systems, including robots, drones, and artificial intelligence (AI) software, to assist in making operations more efficient and streamlined.

“Technology is revolutionizing the design and operation of warehouses,” Hertz explains. “Automation helps drive productivity and speed while reducing the risk of human error, which is essential in meeting the requirements of e-commerce.”

These technologies not only improve efficiency but allow the warehouse operators to deal with the growing demand for inventory management and rapid fulfillment. The computerized inventory systems assist in improving stock levels as well as the availability of the product as and when required. Additionally, automatic sorting and also packing systems maximize throughputs and speed up shipping.

Sustainability in Industrial Real Estate

With industrial real estate growing to serve the needs of e-commerce, sustainability has become an increasing concern. Developers are introducing green construction methods, renewable energy sources, and sustainable materials into building warehouses. These initiatives reduce the environmental impact of growing logistics operations.

“Industrial developments now must be environmentally sustainable,” Hertz explains. “Green building certifications and energy-efficient systems are more of a requirement than an amenity, especially for e-commerce tenants that prioritize sustainability.”

Solar panels, energy-efficient heating, ventilation, air conditioning systems, and rainwater harvesting are becoming the norm in new warehouse construction. Not only are these green features beneficial to the environment, but they also reduce operating expenses for warehouse tenants and owners.

The Future of Industrial Real Estate

In the future, the industrial real estate market will be called upon to continue evolving to support the growth of e-commerce. Developers will continue to explore new options such as multi-story warehouses, automation systems, and green building practices. Further, the expansion of “dark stores”—fulfillment centers specifically designed to execute online purchases—will spread further, blurring the distinction between retail and industrial space.

“E-commerce has only just started, and the demand for industrial space will only grow,” Dov Hertz concludes. “The development of warehouses is an ongoing evolution, and those that stay in front of the wave will thrive in this rapidly changing marketplace.”

As internet shopping keeps growing, so will the need for high-spec, high-tech, and well-located industrial property. The future of warehouse construction is not only about fulfilling today’s requirements but also about forecasting tomorrow’s needs in an ever-evolving global economy.

For more info check:
Dov Hertz of DH Property Holdings Interview on NEREJ