By Amy Keller, Contributing Writer
Shortly after the Society of Industrial and Office Realtors® (SIOR) was founded in 1941, the group was tapped to perform a critical task. The U.S. was readying to enter World War II, and the Department of War asked the organization’s 200 charter members to locate warehouse space across the nation to manufacture everything from tanks to uniforms to prepare the country for war.
Three-quarters of a century later, e-commerce battles are fueling another warehouse boom and SIOR members are at the forefront, leading the charge to help businesses find strategically located industrial facilities to optimize their supply chains.
“This has been a remarkable transformational shift in American business,” says Craig Meyer, SIOR, SIOR Global President from 2008-09 and the head of Jones Lang Lasalle’s Logistics and Industrial Services Group. A decade ago, he notes, warehouses were little more than mega-sheds, optimized for moving pallets and cases of goods to the shelves of brick-and-mortar outlets. Today, amid the proliferation of online shopping, traditional warehouses are being supplanted by massive, cutting edge fulfillment centers, where online orders are received, sorted, packed, and dispatched to consumers at break-neck speed.
At the same time, mid-sized performance centers half that size are popping up in secondary markets and merchants are increasingly seeking smaller, urban warehouse space—microwarehouses, if you will—to accommodate the “last mile,” or final leg of delivery, and meet customer expectations for near instant gratification.
Microwarehousing solutions for tackling last-mile logistics run the gamut from “click-and-collect” methods, where a consumer makes a purchase on their smartphone and picks items up in a retail store or locker, to pop-up distribution centers, where a truck pulls into a parking lot and a swarm of on-demand delivery drivers pick up items and deliver them within a small community radius.
Whatever the method, the digital shopping revolution sparked by Amazon has been a boon for the industrial real estate sector.
According to CBRE, every $1BB of online sales requires about 1.25MM sq ft of logistics space and e-tailers are gobbling up square footage. National vacancy rates for warehouse and distribution space reached a 17-year-low of 5.3% during the first quarter of 2017, according to a market analysis by Jones Lang Lasalle.
“For those of us in the industrial real estate business, we will look at this as the Golden Age,” says Meyer, who has been working with a major retailer to revamp the company’s distribution system and roll out 10MM sq ft of new fulfillment centers across the nation. “Everybody is coming to us saying ‘We are recasting our online ecommerce approach and we’re reevaluating how we distribute product.’”
Robert Thornburgh, CPM, SIOR, Executive Vice president and Partner with Kidder Mathews in Los Angeles and SIOR Global President-Elect, says it’s not just the e-commerce evolution that’s redefining the market. “Well-located efficient industrial space is being competitively bid, whether for lease or sale, while the scarcity of suitable infill sites in major markets for development has paved the way for a new supply source: the redevelopment of aging products—out with industrial and in with the highest and best use such as creative office or residential.”
Staying on top of such trends is mission critical in this era of fast-paced change, and SIOR has an array of tools and resources to help its 3,100 broker members do just that. Offerings include advanced educational coursework, in-depth reports on industry trends, localized chapter events, and two annual best-in-class conferences.
SIOR membership also confers a leg up on the competition. Professionals with significant experience and high production volumes are eligible to join the organization. Specific educational requirements, endorsements by colleagues, and ethics courses are also required for membership—so clients know when they hire an SIOR their commercial broker is an experienced professional who’s been “tested in terms of capability and expertise,” says Meyer.
Rising professionals who don’t yet meet the requirements for full membership can still get involved through the “SIOR Candidate Membership” program, which pairs them with a local mentor and gets them on track to qualifying for SIOR designation. Industry veterans like Thornburgh say the extra effort is well worth it. “The designation has been extraordinary – not just in the context of business referrals, but having a support network of elite commercial real estate professionals across the globe, expanded resources, and the development of meaningful, lifelong friendships,” he says. “Some of the best ideas I have implemented in my business dealings are a direct result of a local SIOR event or global conference where a colleague stretched my way of thinking.”
Drawing on the “knowledge, innovation, creativity and entrepreneurial thinking” of fellow SIORs can go a long way to help brokers successfully navigate this era of change, says Thornburgh. “Looking forward as an industry, similar
to how our product type is adapting, real estate brokers need to be willing to innovate. Yesterday’s methods will not be what solves today’s, let alone tomorrow’s challenges.”
To learn more about SIOR and how to become a member, visit http://www.sior.com/membership/become.