Originally published on October 20, 2023, by Pamela Jew for NAIOP.

With ChatGPT suddenly mainstream, artificial intelligence has become a hot topic with the ability to disrupt any and every industry it touches. The commercial real estate industry is not excluded from this disruption, but the implementation of AI in the space leaves a lot yet to be discovered.

At NAIOP’s CRE.Converge conference this week, industry professionals discussed how AI is evolving and how it can change the commercial real estate industry. Ajey Kaushal, senior investment associate, JLL Spark Global Ventures led a conversation with Todd Huebsch, vice president, Yardi Systems Inc., David Knight, chief architect, Dealpath, and Olivier Maene, global product director, Avison Young. 

To begin, each panelist provided an overview of how their respective companies deploy AI. Huebech presented different AI solutions from Yardi, the largest software developer specializing in real estate, that it has already rolled out in 2023: chatbots, work orders, smart key and an assistant. Knight said Dealpath is questioning how much agency we give AI, and that the software company still believes in human decision-making for key decisions.

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Originally published on October 16, 2023, by Kathryn Hamilton, CAE for NAIOP.

A 1.5 million-square-foot cold storage facility an hour south of Atlanta sits unassumingly among farmlands and other distribution warehouse facilities containing everything from mattresses to salad dressing to office supplies. Inside its doors though, racks and rows of premium chocolates are stacked high in an international chocolate producer’s distribution facility for the Southwest.

Built by Alston Construction and operated by Geodis, the facility began as a pilot project and was leased early on by the chocolate company, which gave the company the ability to do some customization during development. Completed in 2018, the tilt panel building is insulated with 4” insulated metal panels, along with insulated overhead doors with food grade seals. It has a 60-mil thermoplastic polyolefin (TPO) roof membrane over LTTR-28 (long-term thermal resistance) insulation, with all gaps filled with closed cell spray foam.

Of the total facility, 750,000 square feet is cooled to 55 degrees, and another 150,000 square feet is lowered to a chilly 42 degrees in what’s called the “5C room,” which houses one of the other brands of the chocolate producer that is required to be stored at lower temperatures.

Originally published on July 27, 2023, by Trey Barrineau for NAIOP.

Electric vehicle (EV) use is accelerating, and commercial real estate owners can reap significant benefits from installing EV charging infrastructure at their properties. A recent NAIOP webinar explained how EV charging station implementation can attract and retain tenants, improve the property’s environmental score and generate new revenue streams.

According to Bryce Christensen, P.E., a senior partner with Kimley-Horn, EVs are becoming more affordable. Of the more than 40 options currently on the market, he said that 10 now cost under $40,000, and nearly every major automaker made public commitments to EVs, which should boost adoption by helping bring prices down even more.

“It’s no secret that the market share of electric vehicles in the United States and worldwide is trending up,” Bryce said. “The demand is rising, and many potential consumers are just waiting for more charging infrastructure before committing to going all electric.”

Originally published on June 9, 2023, by Natalie Fidlow, CFA for NAIOP.

“[Artificial Intelligence] won’t replace real estate people. AI will replace real estate people who don’t have AI,” said Itay Ron, senior president of Northeast markets at Faropoint at the I.CON East conference this week in Jersey City, New Jersey. “Right now, we are reaching an inflection point where you can easily use data for commercial real estate,” Ron continued, discussing the state of artificial intelligence technology and how commercial real estate professionals can utilize AI in their investments. 

AI in the Spotlight

Earlier this year, Microsoft-backed Open AI released ChatGPT to the public. This tool, which can create human-like text, showed the world the robust application of generative AI, but it’s not new. “AI has been used behind the scenes for many years.  That release set off the arms race of AI between Microsoft and Google,” said Ron. And over the last year, you can see the impact of utilizing AI. News outlets and written content creators are being materially disrupted. For example, BuzzFeed, CNet and Insider are all news outlets decreasing their workforces by at least 10% and using AI to create news stories.

Insurance is another industry that is ripe for disruption, according to Ron. The industry is beginning to utilize active insurance; sensors on wearables will send your data to underwrite your health insurance policy. Sensors on your car will do the same for your auto. “By 2025, more than one million devices will be connected to sending data within insurance.”

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Originally published on June 8, 2023 by Brielle Scott for NAIOP.

At NAIOP’s I.CON East: The Industrial Conference today, attendees explored the logistics building of the future, as designed and imagined by Matt Brady, LEED AP, architect and executive vice president, and the team at Ware Malcomb.

“The challenge we’re trying to solve with the logistics building is primarily the speed to customers,” Brady said. Getting closer to the consumer requires in many cases that companies locate in more dense urban sites. And typically, the size of those sites is limited – “you can’t just go and take down 20 acres in an urban environment, and it’s extremely expensive.”

“We have challenged ourselves to think creatively if we’re going to meet the needs of occupiers as those needs evolve, and that’s what this whole exercise is about: designing the logistics building of the future.”

Originally published on May 11, 2023, by Brielle Scott for NAIOP.

California’s Title 24, the state’s energy code, has required solar for all low-rise multifamily projects since 2016, but new provisions have gone into effect this year, impacting any projects permitted since Jan. 1, 2023.

To help navigate the regulatory landscape and explain how solar and energy storage can benefit building owners and developers, Rachel McCafferty, director of business development for CalSolar Inc., shared her expertise during a NAIOP webinar on the topic.

“The solar requirement has been extended to not just multifamily projects but to all commercial and industrial new construction in California,” McCafferty explained.

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Originally published by Marie Ruff for NAIOP E-Newsletter.

The next phase of advanced manufacturing innovation is ready for launch in the Long Beach region of California. Attendees of NAIOP’s I.CON West were able to go behind the scenes on a project tour of cutting-edge advanced manufacturing facilities in Douglas Park, an industrial, retail and hotel center that spans more than 260 acres adjacent to the Long Beach Airport.

Morf3D: Advancing Aerospace with Additive Manufacturing

The first stop on the tour: Morf3D, a company that primarily serves clients in the aerospace, space and defense industries. These industries require highly specialized equipment that meets stringent specifications including being durable, lightweight and thermal-resistant, which Morf3D achieves using metal additive engineering and manufacturing.

The 90,000-square-foot Douglas Park building was a spec building that Morf3D has been adapting to suit the varying needs of their clients, from security clearance requirements to power needs. Some tenants require temperature control within four degrees to keep the equipment running smoothly and prevent any quality concerns with the products; others require the temperature to not vary more than two degrees.

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Amid lower pressure on global supply chains, increasing inventory carrying costs, a cooling economy and a decrease in the rate of e-commerce expansion, retailers and logistics firms have slowed the rate at which they acquired additional industrial space this year. Net absorption of industrial space in the first two quarters of 2022 was 151.2 million square feet, down sharply from 2021’s record pace but still notably higher than in prior years (see Figure 2). The authors expect the still-hot industrial market to cool, and they forecast that the net absorption rate will continue to decline until it returns to the pre-pandemic trend. Total net absorption of industrial space in the second half of 2022 is forecast to be 112.4 million square feet, and full-year absorption in 2023 is forecast to be 209.4 million square feet (see Figure 1 for quarterly projections).

The Industrial Market

Supply chain congestion eased during the first half of 2022, as illustrated by the decline in the Federal Reserve Bank of New York’s Global Supply Chain Pressure Index from 4.35 in December 2021 to 2.41 in June 2022. As a result, retailers and logistics firms have shown less interest in leasing or buying industrial space before it is needed, a trend that contributed to higher absorption in 2021. Amazon’s decision to substantially scale back its expansion plans is the most prominent example of this shift in demand for industrial space. Nonetheless, smaller e-commerce firms, and even traditional retailers, continue to lease more distribution space despite slowing e-commerce growth as more consumers return to shopping at bricks-and-mortar retail. Industrial vacancy rates remain historically low as the ability to supply new space continues to face physical and political limitations in land-constrained markets. These low vacancy rates continue to cause asking rents, and ultimately transaction prices, to increase. Premium prices are being paid for properties with soon-to-expire leases and even vacancies as they allow owners to lease out more space at record-high market rates.

• By Russ Hazzard, Jonathan Chang, Development Magazine (photo of Vancouver, B.C. Costco by Raef Grohne)

Experiences in Canada and Asia provide case studies for building these complex properties.

Over the past 15 years, multilevel warehouses — particularly those used for retail purposes — have been a growing trend across Asia and, more recently, in the United States. However, some challenges accompany their design and construction that are not encountered in the traditional approach to large-format retail. With operational criteria at the top of the list, these challenges vary heavily based on several factors, including location, footprint, environment, jurisdictional requirements, and cultural and community influences.

The increase in demand for and construction of multilevel warehouses has unearthed numerous unique considerations not present in traditional warehouse environments. These challenges — each intricate in their own right — have required creative solutions and careful programming to successfully bring each project to life.

Parking and Vehicle Flow

One of the most critical design challenges for vertical warehouses is the traffic flow of vehicles and the structure’s parking. While the goal is to keep the sales level on a single floor for ease of operations and the consumer’s shopping experience, parking for multilevel warehouses can reside either above or below grade. Both options have pros and cons: Below-grade parking requires excavation, which can increase costs and complications. However, it provides a solution for lot coverage or height restrictions in situations where those apply. Above-grade or rooftop parking is preferred as it saves both construction time and money.

Customized resolutions to optimize vehicle traffic flow and increase ease of parking have also been employed, varying from warehouse to country to country. For example, in Sinjhuang, Taiwan, indication lights for open parking spaces are used to determine capacity at a glance. In Suzhou, China, car ramps at the entrance steer customers directly up to each floor, allowing them to bypass complete levels. Larger-than-regulation parking spaces — typically very compact in Asia — are also used, granting customers peace of mind. There is no need to worry about maneuvering around tightly packed vehicles in the garage. As an added benefit, large spaces also increase vehicle flow; running in and out of an area is completed in one move vs. two or three.