AEC firms tap into the boom in logistics center construction

A Ryan Companies project in southern California is being built to meet its city’s rigorous green standards.

July 11, 2018 |

An aerial view, taken this week, of the three buildings under construction that will comprise the Pacific Vista Commercial Center in Carlsbad, Calif. This Center is scheduled to start operating this fall. Image: Ryan Companies

As ecommerce assumes a more dominant role in retailing, logistics and distribution centers in support of ecommerce warehousing and delivery are springing up across the country.

For example, Verst Logistics in June opened a nearly 400,000-sf ecommerce fulfillment center in Hebron, Ky., near the Greater Cincinnati Northern Kentucky International Airport. This DC will allow Verst to distribute products to about 85% of the continental U.S. within 48 hours, says Dean Hoerlin, Verst’s Vice President of Fulfillment and Distribution.

Capital Development Partners and Greenfield Partners broke ground last month on a 2.3-million-sf, $125 million logistics center located on 197 acres in Pooler, Ga., 10 miles from the Port of Savannah. The first of two buildings is set to open next April, and the two buildings will have transload capacities and be able to store more than 2,000 containers.

Also last month, construction began on the 401,577-sf Oakdale Logistics Center on 24 acres in the Dallas suburb of Grand Prairie, Texas, marking the third such development in the Dallas-Fort Worth metroplex between CT (a real estate investment firm) and the developer Port Logistics Realty.

“The primary focus of CT’s growth strategy is to develop, own and manage a portfolio of logistics projects in high demand Tier 1 markets nationwide,” says James Watson, managing partner with CT, which recently announced the development of 1.34 million sf of large-scale distribution buildings in greater Chicago.

CT also is developing logistics centers in northern California, Atlanta, and New Jersey, and its current property holdings could support the addition of 15 million sf of industrial buildings over the next five to seven years.

The Commerce Department estimates that last year consumers spent $453.5 billion for online purchases, a 16% increase over 2016. Some market watchers see ecommerce rising to nearly 14% of total retail sales by 2021, from around 10% this year.

These expanding online purchasing activities among consumers are propelling industrial construction, and presenting fertile opportunities for AEC firms in this sector.

This week, Prologis, which specializes in logistics real estate, announced its selection of Graycor Construction as GC for its I-17 Logistics Center-Phase 1, a Class A development on 25 infill acres in Phoenix that will consist of four buildings totaling 558,712 sf. This development will replace 20 outmoded buildings that were recently demolished. Completion of Phase 1 is scheduled for first quarter of 2019.

A rendering of the Prologis I-17 Logistics Center-Phase I, a 558,712-sf complex that will open in Phoenix in the fall of next year. Image: Prologis

 

Clayco provided construction services for the $300 million 856,000-sf Amazon Fulfillment Center in Kansas City, which opened last August and was assembled using tilt-up concrete panels and structural steel. This four-floor Center has 2.3 million sf of usable space, and employs more than 2,000 full-time workers.

Clayco has built other warehouses for Amazon in Indiana, Virginia, and New Jersey, and has an 850,000-sf facility under construction in Chicago.

Last August, Ryan Companies closed on a 25.9-acre site in Carlsbad, Calif., where it is building on spec the Pacific Vista Commercial Center, a three-building, 411,000-sf logistics/distribution center located within the Carlsbad Oaks North Business Park. Ware Malcomb provided design and architectural services. SB&O provided civil engineering and storm water design services.

Chris Wood, President of Ryan Companies’ West Region, tells BD+C that this complex should be completed by October. Ryan has already secured a 10-year lease agreement with the Center’s first tenant, the storage provider PODS, which will lease Building B. Wood says it is likely that the entire complex will be leased by three to five tenants.

Inland Empire can’t get enough warehouse space

Ryan Companies is building into a market where demand for warehouse and logistical space seems insatiable. Wood says that, as of the third quarter of 2017, there were nearly 540 million sf of logistics/warehouse buildings in California’s Riverside and San Bernardino counties. For the past several years, the Inland Empire has been adding between 20 million and 25 million sf annually.

JLL estimated that in the 12 months ended December 2017, 43.5% of leasing activities for facilities larger than 50,000 sf came from ecommerce tenants. JLL also estimated at the time that there were 24 million sf of new warehouse space under construction In the Inland Empire, where the vacancy rate was 3.5% and rents averaged 53 cents per sf.

Pacific Vista Commercial Center, says Wood, is one of the first buildings that are being constructed under Carlsbad’s Climate Action Plan, which dates back to 2015, and whose goal is to reduce greenhouse gases to meet California’s mandated targets.

Among the facility’s innovative features is a 0.915-MW photovoltaic rooftop solar system that is allocated for each building that’s designed with its own substation. The PV array is set up to offset 50% of a tenant’s average utility usage, and the lease puts the system in each tenant’s name for metering purposes and so the tenant can reap the full benefits of the solar array’s energy output.

The Center will also offer 24 electric vehicle charging stations, as mandated by the Action Plan. There are 1.77 total parking stalls for every 1,000 sf of warehouse space in the Center.

Wood says Ryan Companies, which has been building industrial facilities for years, embraced Carlsbad’s green requirements. The Center was pre-certified LEED for core and shell, and Wood says it should achieve a Silver certification at a minimum.

The 26-acre Pacific Vista Commercial Center will include segregated vehicular and trucking access points and lanes that run between the buildings. PODS, the storage supplier, is the Center's first tenant, having agreed to a 10-year lease of Building B (top right). Image: Ryan Companies

 

Robust tenant amenities

Greenness aside, Wood says the key leasing points of this Class A facility are its functionality, location (near the Pacific Ocean), and its flexibility.

The Center will include completely segregated vehicular and trucking access points within the open area that runs between the three buildings. It will offer one dock door position for every 4,372 sf of warehouse space, and 32 ft minimum clear heights to maximize interior cubic storage capacity.

The Center’s tenant amenities include six separate outdoor employee areas with views of the surrounding open space and ocean, a centralized food truck location, sand volleyball court, bocce ball court, and a secured bicycle storage area for 35 bikes.

This $67 million project is a joint venture between Ryan Companies and Deutsche Asset Management’s DWS/RREEF Property Trust division. The partners have another joint venture spec project in the works in Poway, Calif., a 530,000-sf logistics center with two buildings that is scheduled to break ground in November.

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