Build Industrial Real Estate Strategy Around Growth

The Cheapest Facility on Day One Often Costs the Most by Year Three

Every industrial real estate strategy meets the same test eventually: Does the building fit the business two or three years after it opens?

For a new warehouse, distribution center or fulfillment center, companies rarely ask that question up front. They ask how fast a site can close, what the lease costs per square foot, when construction can start or how quickly they can move in.

Those questions matter, but they answer the wrong problem. In a world of perpetual disruption, a warehouse signed today must support a different business in a few years – or even sooner.

Building a strategy only around today’s requirements sets up tomorrow’s retrofit. Talk with our team about building for where the business is going, not just where it stands today.

 

The Limits of a Site-Selection Mindset

Many organizations treat a new warehouse or fulfillment center the way they treat any other procurement decision. Define the specs, solicit options and pick the lowest qualified bid.

That approach might work for short-term purchases, but a warehouse does not fit the same mold. Distribution and fulfillment centers are long-term operating assets. They shape cost, service and capacity for years, and they store the inventory that keeps a business running.

They deserve the same financial scrutiny a company would apply to a major capital investment. Interest rate spikes only raise the stakes, since they shape the cost of that capital.

Treating industrial real estate as procurement means few companies examine the deal structure at all. They don’t ask whether disposing of an old facility could fund the new one, or if a joint venture could improve the numbers.

Fewer still model how the building needs to perform three or five years out before signing anything. The result shows up later.

Demand shifts. Customer commitments change. The warehouse space that fits today’s volume and needs can’t handle next year’s.

Expensive modifications hit mid-construction or just after companies sign a long-term lease. And a leadership team absorbs costs they could have managed months earlier.

 

What a Sound Industrial Real Estate Strategy Requires

A sound industrial real estate strategy starts by pairing two kinds of knowledge that rarely sit in the same room.

First, the executive and operating teams must understand where the business is going, its volume trajectory, channel mix, office space needs and service commitments. Second, the company needs access to deep experience in designing, financing and building warehouses, distribution centers and fulfillment centers.

Neither factor alone produces a building that remains cost-effective over time. The business side does not know construction, and the development side does not know the business.

Combining the two, like Tompkins Ventures does, makes a warehouse adaptable. And adaptability comes down to specific decisions made before anyone pours the concrete or signs a lease:

• Clear height high enough to add mezzanines or automated storage later, not just to fit today’s racking.
• Space columns and bay depths wide enough to accommodate different racking layouts or automation equipment without reworking the structure.
• Floor slabs thick enough, with load capacity for heavier material handling equipment than the business currently plans to install.
• Dock doors and trailer court with room to expand. Adding doors after a site fills up costs far more than building them in from the start.
• Power capacity and conduit sized for future automation. Retrofitting electrical infrastructure into an operating warehouse disrupts the business it supports.

Each of those decisions costs more at groundbreaking than skipping it does. Each one also costs far less than tearing into an operating warehouse to fix a limitation nobody planned around.

Options help. That’s why Tompkins Ventures has access to strategically located sites throughout the U.S. Our partners acquired much of that property off-market, before a public listing could create competition.

That gives clients real optionality from day one.

 

The Return on a Disciplined Industrial Real Estate Strategy

A warehouse built around next year’s business, not just this year’s budget, changes the return over time.

Designing for the future avoids the mid-project change orders that come from guessing wrong about requirements. The right process gives operations room to add automation or shift channel mix without a second construction project three years in.

And it turns a real estate decision into what it should be: a long-term commitment to how the business will operate.

That is the standard for the next warehouse, distribution center or fulfillment center. It comes down to which building supports the business a company is building, not which site costs the least today. If that question doesn’t have an easy answer yet, Tompkins Ventures is a good place to start the conversation.

 

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