Increased trade with Asia— primarily with China — is altering traditional shipping patterns and making Southern California a hotbed of warehouse construction activity for "intermodal" facilities. These logistics centers utilize more than one mode of transportation to ship goods.
The "Inland Empire" east of Los Angeles — primarily Riverside and San Bernardino Counties — is experiencing some of the greatest development activity, due in part to the increased volume of imports entering the country at the ports of Long Beach and Los Angeles.
There's a logical reason for this pattern of development, says H. Lee Hales, president of Richard Muther & Associates, an industrial building planning firm based in Marietta, Ga. As Hales sees it, it is counterproductive for a company that distributes nationally and imports a substantial amount of product to distribute it from the central U.S. and then backhaul a portion of it to the West Coast. As trade with Asia increases, Hales expects to see a general shift of warehouse development to locations west of the Rockies.
Warehousing activity will respond to these logistical shifts, says Hales. For example, if furniture goods formerly produced in North Carolina now enter the U.S. through West Coast ports, changes in shipping patterns are inevitable. Hales says industry developments will prompt shippers to reevaluate the mission and locations of their current warehouses and decide whether to expand these facilities or develop additional ones at other locations. This assessment will be particularly relevant if fundamental changes in the location of supply sources have occurred.
Responding to a growing volume of foreign trade, the dock area at the Port of Long Beach has been enlarged, but the amount of warehousing space at the port has not kept up with demand. Containers may have to sit outside for days at a time, but after a week, they generally are moved by truck or train to warehouses in the Inland Empire or elsewhere, for consolidation and repackaging, according to port spokesman Art Wong.
Simpson Strong-Tie Co.’s 240,000-sf building in Stockton, Calif., includes manufacturing and warehouse space.
Typical warehouses being constructed in the Inland Empire range in size from 500,000 sf to 1.5 million sf, according to Ron Wink, a VP with Irvine, Calif.-based architect Ware Malcomb, which is active in the area. Wink cites the consolidation of facilities and the need of retailers such as Kohl's and Wal-Mart to support an expanded presence in West Coast markets as other factors behind Inland Empire activity.
Another response to current distribution patterns: the redevelopment of the former George Air Force Base in Victorville, Calif., into the Southern California Logistics Airport, a 5,000-acre facility with a 15,000-foot runway and an onsite U.S. Customs facility. The airport promotes its less congested airspace compared to Los Angeles International, and says cargo it receives can be cleared and transported within 24 hours via rail or truck to locations as distant as Chicago.
Stirling Airports International, Foothill Ranch, Calif., is teaming with Catellis Development Corp. to construct commercial build-to-suit buildings at the airport.
In Northern California, warehouse expansion is occurring at the Port of Oakland and in Sacramento, which, although 79 miles inland, is connected to San Francisco Bay by the Sacramento River and a 43-mile man-made channel.
Other markets lively, too
California is not the only center of intermodal activity. More than 2.5 million sf of speculative warehouse space is under development along the I-55 corridor 25 miles southwest of Chicago. These buildings are designed for multi-tenant occupancy, according to Jerry Krusinski, executive VP of Krusinski Construction Co., Oak Brook, Ill., whose firm has been active in this market for 10 years.
Krusinski says that although a single tenant is the most desirable user, the buildings are designed to be easily subdivided. They typically incorporate multiple entrances, most often at the corners of the building, and provisions for easy subdivision of utilities and tap-ins to sewer lines. These flexibility-enhancing features enhance residual value and make these buildings attractive to institutional owners, he says.
The first phase of the Pico Rivera (Calif.) Commerce Center, developed by Sares Regis Group, consists of two buildings, which provide 244,000 sf and 170,000 sf of space.
On the East Coast, 200 acres along the Hudson River in Jersey City, N.J., are being redeveloped as the Greenville Yards Industrial Park. Pennsylvania-based developer Keystone Property Trust is marketing the property as a distribution center for bulk cargo.
Going to new heights
Warehouses are also getting a little taller. Ware Malcomb's current warehouse projects are all 32 feet high, compared to 30 feet a few years ago. Buildings in the I-55 corridor range in height from 28 feet to 32 feet. To exceed this height, thicker floors are needed to support the additional weight of stored product and the materials handling equipment, says Krusinski.
Fire protection is another key element of warehouse design. "Early suppression fast-response" sprinklers are appropriate for about 85% of warehouse applications, according to code consultant RJA Group, Chicago. But it recommends that standard systems also be evaluated to determine whether the added cost of installing the more elaborate early suppression sprinkler system should be assessed as a tenant upgrade.