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VOL. 48 | NO. 16 | Friday, April 19, 2024
Big, boring warehouses won’t cut it anymore
By Joe Morris
This 174,000-square-foot industrial warehouse is one of nine warehouses in Prologis City View. The logistics facility is located 15 minutes from Downtown Nashville and has access to I-40, I-440, I-24 and I-65.
-- Photograph ProvidedHomebuilders have long known that amenities sell. Granite countertops, specific lighting and high-end cabinetry. The list goes on and on.
That’s always been somewhat true in the office-development world, where a set class structure has been defined by amenities ranging from views to perks such as fitness centers.
The industrial world is a little late to the party, but it’s catching up too as tenants demand a more bespoke, appealing experience as well. Whether it’s “flight to experience” or “flight to quality,” it means more money up front, but an opportunity to capture higher-end tenants.
“For office spaces, it means highly amenitized,” says Janelle Gallagher, first vice president within the Advisory & Transaction Services Group in CBRE’s Nashville office. “And that means both within the office itself as well as the surrounding areas.
Concierge-level services, bringing hospitality environment into the office space. Walkable retail and restaurants, a parklike setting. Conference facilities, a gym … anything that’s going to bring people back into the office even if a hybrid work environment is being offered. Properties without those kinds of amenities are struggling because the workers don’t want as much to be there.”
On the industrial side, time was that a basic box was all that needed to be built to lure in tenants. Not anymore, says Jack Armstrong, first vice president broker with CBRE Nashville.
“It’s not just embellishments like LED lighting versus fluorescent tubes,” he says. “Now you’re seeing things like a greater height clearance, a taller building. A few years ago, you’d see maybe 32- or 36-foot clearances and now it’s along the order of 40 feet. That allows for more cubic volume for racking and storage, which tenants want.
“Tenants also want things like climate control, HVAC in the warehouse, more creature comforts. That’s due to Amazon and other companies coming in and creating some competition for those warehouse employees,” Armstrong continues. “You’re also seeing bigger glass storefronts, furnishing and finishes that make the front areas more like an office. To a degree it’s always going to be a box, but now it’s a nicer box.”
Both Gallagher and Armstrong say that today’s new builds are being done with this in mind, as well as being outfitted for future needs.
“They are planning ahead,” he notes. “You’re seeing roofs being prepared for future mounted units for climate control or for solar panels. You’re seeing electric vehicle charging stations – or the infrastructure for them – being put into place for both employee vehicles as well as a corporate fleet or cars or trucks. Today’s tenant might not have sustainability as their corporate culture, but tomorrow’s might – builders want to be ready.”