This article was published in the Summer 2021 issue of Urban Land.
With features such as mezzanine offices above warehouse spaces and shared-amenity areas in which people can exercise and socialize, developers are transforming the once-staid genre of industrial buildings by incorporating features comparable to those typically found in office and mixed-use projects, according to a panel at the 2021 ULI Virtual Spring Meeting. Panelists also described design changes made to facilitate the increasingly rapid movement of e-commerce goods and rooftop solar installations that can supply most of a building’s energy needs.
Panel moderator Jessica Ostermick, director of industrial and logistics for CBRE’s New England operation, challenged what she described as a common misperception that industrial development tends to be formulaic and less creative.
“There are plenty of projects across the U.S. where developers are seeking innovation and distinctive design,” she said.
Matt Mitchell, vice president for industrial at Denver-based Westfield Co., said that his company’s partially completed Pecos Logistics Park includes conference rooms, flexible meeting space for corporate training, a kitchen with indoor and outdoor dining areas, and even a bike storage space with shower facilities for workers who are two-wheeled commuters.
Those features “add something that you don’t see every day in your generic industrial building,” he said.
But the amenities also can add value for tenants because they are afforded the option of using more of their space for true logistics activity rather than having to build out office and meeting space that would often go unused, Mitchell explained. While many larger national tenants may still opt for traditional office plans, the amenities are particularly attractive to local and regional companies for which the site is their only location.
HighPoint Elevated, a cutting-edge industrial and logistics park in Aurora, Colorado, that is being developed by Minneapolis-based Hyde Development and M.A. Mortenson, is designed to interconnect to nearby residential areas and a hospitality and retail corridor. According to the project’s website, it could eventually include 15 buildings and more than 5.5 million square feet (511,000 sq m) of class A space.
Paul Hyde, president and CEO of Hyde Development, said HighPoint’s concept and design reflect the need to “create a community where people could live and work and go to lunch or dinner, or have a beer after with friends or coworkers.”
That objective “forced us to reexamine what it meant to create a modern industrial park,” Hyde noted.
He said the project draws inspiration in part from a historical source—the communities that existed several centuries ago at the beginning of the Industrial Revolution, when people lived near their workplaces and shopped and entertained in those same neighborhoods.
To create a similar ambience in an industrial park, a location surrounded by a variety of other land uses is important, according to Hyde. The HighPoint site, for instance, lies close to the Gaylord Rockies Resort & Convention Center and a retail corridor, as well as Denver International Airport.
“That’s important to creating not just a place where people will come from nine to five, but they can have their lunch, meet for coffee, and stay after work to have their exercise class,” Hyde said.
In addition, it is important to build amenities and create a variety of different design offerings, and “not just stamp out the same building 10 times.”
When it comes to creating amenities, Hyde said that the developers are borrowing ideas from office developers.
Scaling those concepts across a 400-acre (162 ha) park, however, required thoughtful planning. To get it right, the company uses surveys to figure out which particular amenities users are most eager to have, and then spreads those amenities throughout the site for accessibility.
To capitalize on a fast-growing trend, the developers also have plans for a cold-storage building.
Hyde noted that we have seen COVID-19 accelerate people’s expectations and practice of getting not only their groceries but also their meals delivered to their homes on very short notice. “The existing cold warehouse infrastructure isn’t capable of supporting that,” he said. “You’re seeing new cold buildings being developed. We’ve designed ours to accommodate either all freezer, or combination freezer, cooler, and ambient.”
Flexibility is crucial to meeting the rapidly evolving market for cold storage, Hyde said.
“We’ve spent a long time understanding the design, and what makes those buildings flexible,” he said. “The proper clear height—we’re showing 50 foot [15 m], but it could go higher.” Refrigerated dock areas and an adequate number of spots to park trailers are critical as well.
Mezzanine space for offices and outside balconies also can add value to industrial buildings, explained Dan Green, CEO and co–managing partner of JA Green Development, which has been developing warehouses near major airports across the United States for decades.
Adam Knoff, associate director and cofounder of Unico Solar Investors, said that his company has outfitted industrial buildings in Massachusetts and Northern California so that they get 80 percent of their electricity from solar panels.
Knoff explained that getting solar to work in a particular local or regional real estate market requires at least two of three critical factors. “The first obviously is sunshine,” he noted. “California works better than western Washington, for example.”
Second is having the right regulatory environment to support solar energy, with the ability to create a third-party ownership structure being crucial as well, Knoff said. Third, he said, is that “we need a relatively high-rate environment,” so that solar will be economically competitive.