Adding Value to Your Next Industrial Development Project
Industrial real estate’s time has arrived. As the COVID-19 pandemic has accelerated retail’s shift to e-commerce, the demand for industrial spaces has surged. According to a 2020 JLL Forecast, more than 1 billion square feet of warehouse product will be required by 2025 to satisfy market demand.
While the demand is there, this asset class is not without risk. Competition among developers is fierce, and there is no margin for error. To make the most of this market, developers need a trusted guide that can build certainty. Here are three criteria developers should use when evaluating potential construction partners:
- Understanding of the Product
The relatively rapid adoption of e-commerce is leading to a fast evolution of industrial facilities. Distribution centers and warehouses as a whole are getting larger and taller. However, the need for last-mile fulfillment centers is also fueling the creative reuse of existing spaces in suburban centers and urban cores.
It’s not enough to hire a contractor that can build a warehouse or convert a big-box store into a distribution center. Developers will get more value from engaging with a partner that can offer insights on current and emerging trends in e-commerce facilities.
For example, a construction partner that is willing to take an upfront risk with the developer by offering pre-construction services will lead to a more informed go/no-go decision. A partner that is willing to consider flexible construction approaches (such as tilt-up or precast construction) can also mitigate supply chain disruptions. Finally, collaborating with a contractor that can provide guidance on building for a future of less carbon and more automation will result in a more marketable product.
- Familiarity with Local Markets
Capitalizing on the demand for e-commerce requires convenient access to airports, interstates, ports, or rail hubs. Finding a prime spot at an attractive rate will have limited benefit if the local infrastructure can’t support the rapid movement of goods.
A construction partner that has established relationships with brokers and site selectors can save time and add tremendous value to a project. Knowledge of local zoning restrictions and an understanding of site conditions can also shorten the due diligence process by enabling developers to zero in on feasible sites more quickly and cost-effectively.
- Ability to Manage Risk
The financial success of e-commerce facilities are driven by budget and cost certainty. After all, the building is the product. Any delay in schedule could give the competition a jump on the market. Likewise, inaccurate estimates or budget creep will erode profits and, potentially, stakeholder trust.
Working with a contractor that has a developer mindset will set the project up for success from the start. That means finding a partner that understands why price, quality, and speed are essential—and that has the capabilities, expertise, and resources to deliver. A contractor that is willing to assist with front-end feasibility, planning, and due diligence at no additional cost is an added bonus.
Why Miller-Valentine Checks All the Boxes
At Miller-Valentine, we know developers don’t want to reinvent the wheel with every project. There simply isn’t enough time or capital. After more than 55 years of constructing industrial real estate, we understand our clients’ priorities and expectations as well as the development process. In fact, our entire system is designed to mitigate risk and build certainty:
- We provide support to assess feasibility early in the process, minimizing pre-development costs.
- We develop upfront accurate building costs to gauge returns and provide certainty in the proforma.
- Our footprint extends across 25 states, including high-demand markets in the Midwest and Southeast.
- We have local property insights in all of the markets we serve, as well as established relationships with brokers, site selectors, architects and engineers, and subcontractors.
- Our zero-loss culture for safety, quality, and schedule keeps our projects on track.
As a result, developers have all of the data they need to make informed go/no-go decisions as early in the project as possible.
In today’s ever-changing environment, flexibility is key. We partner with our clients to understand their current needs while developing a plan to tackle the challenges of tomorrow. Above all, we build certainty by delivering on what we promise so that our clients can deliver on their promises.