How should a perfect logistics center look like?

I’m just back at my desk from visiting several industrial sites among all three Baltic states. Under fresh impressions from the trip, I collected a batch of my takes on how does a perfect logistics center should be built. ??

Evaluating warehouse quality

To secure a good investment, the warehouse must correspond to the highest standards of operating efficiency.

?? Multi-purpose application

As more different business activities can be adapted, as more valuable it is. Therefore the warehouse space shouldn’t exceed 85% while keeping the remainder for office premises.?

?? New construction

It’s not only to assume the new building is better than the old one. If the complex was erected in the last year, all possible spoilage can be covered by a construction warranty. This will save in CAPEX costs due to compensation of repair works.?

?? Space flexibility

Standard column grid is important, which means distance between columns should be 12m x 18m // 24m x 24m // 18m x 18m. Such layout allows to build internal walls through the columns and adjust the areas for tenants as needed. Another rule of thumb - 5000 sq.m. is the minimum space for any warehouse facility which could attract institutional funds.?

?? Space capacity

Exploited warehouse height should be between 8-12 meters, to allow pallet shelving and storage. The higher the warehouse and the higher the racks - the more efficient it will be, as more pallets are available to store per one square meter. At the same time, this will require a higher lifting capacity of the floor. For example, a warehouse with an 8-10 meters height requires a lifting capacity of 5t / sq.m., while? 10-12 meters high requires 7 t / sq.m. accordingly. In addition, if the premise is used by a manufacturing company with heavy equipment, the needed floor lifting capacity can be up to 20 t / sq.m.

?? Land plot

Aim for land ownership, not leasehold from the state. This will reduce political risk. Aim for land size too. It should allow allocating not only the minimum number of car parking spaces (required by plan) but also truck parking (ideally).

Selecting location

I would address it also to developers. To increase the chance of acquiring investment from the real estate funds, don’t ignore the below advice :)

??? Superb location

Large-scale logistic centers should aim their location to be close to the main transport arteries of capital cities and to ensure easy access for trucks. For the same reason, the stock-office and urban logistic centers within the city should be located near the main streets and crossroads.

??? Necessary infrastructure?

No less than location, the infrastructure condition plays an important role. There is not much value for the land without access to electricity, water, and gas. Their power and capacity should correspond to the building's needs. And of course, the road is paved till the warehouse entrance.

Financial stability

It sounds pretty obvious, but basic financial conditions should be met in any business.

?? Rental Cash Flow

Such lease agreement terms like a minimum 5 year period, 3-month deposit or bank guarantee, no early termination, and inflation-based price indexation should ensure your stable cash flow. And not to forget - 100% occupancy at the prices representing the current market demand as well.

?? Tenant credibility

Look for quality customers. Their solvency, reputable international or strong local brands matter. Moreover, international tenants can secure the rent from their parent companies - which safeguards additional protection from market turbulence. So it’s good not only to have responsible and caring tenants but also for sound marketing purposes.

Going green

No doubt, it should be environmentally friendly. Sustainability has many forms, few are just mandatory for logistic centers:

?? Tenant wellbeing

Site locations to be reached by public transport or carpooling. Convenient parking places, catering facilities, and service centers that allow meeting daily needs other than work are becoming even more important.? Good feel and work productivity inside the building can be achieved by reducing the use of artificial light through skylights and clerestory windows, specifying roof material to reduce heat gain, bringing outside air into the facility to improve indoor air quality, and creating open recreational spaces.

?? Energy efficiency

Building management system to be in place to regulate inside humidity, ventilation, cooling, and heating. Look for the usage of own energy sources like solar or wind power, heat well - to minimize external energy supply. A great energy-saving example is the usage of LED lighting systems, which respond to movement inside the building.

?? Certificates - they just should be in place

BREEAM - proof of sustainability assessment method for building and infrastructure.

LEED - leadership in energy and environmental design certification program, representing a set of rating systems for the design, construction, operation, and maintenance of green buildings.?

WELL -? a performance-based system for measuring, certifying, and monitoring features of the built environment that impact human health and well-being.

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To sum up, when looking for investment in logistics properties, we strive to tick marks on all points. A well-designed and well-operated facility should be a competitive asset for any institutional capital. ?? ??