PODCAST— Are office
amenities coming to
the warehouse?

The industrial workplace is transforming for the better

March 15, 2021

The competition for talent in the industrial and logistics industry has intensified in response to increased demand from e-commerce and last-mile delivery requirements. To remain competitive in the market, employers are starting to re-think the traditional warehouse, make improvements and build new spaces where employees want to be.

Industrial facilities are now offering amenities and perks traditionally seen in the office sector; transportation, onsite childcare, work-out facilities, and health and wellness programs are increasing in popularity. Employers have also prioritized employee health throughout the pandemic and started focusing more on improved air quality, air conditioning and ventilation systems in warehouses. These changes help close the talent gap and create a more sustainable, productive and employee-centric workplace.

For investors, owners and occupiers of warehouse space, there’s no better time to begin implementing those changes –the industrial industry is not expected to slow down post-pandemic. In fact, the sector is expected to grow to 1 billion square feet by 2025 and e-commerce sales are positioned to hit $1.5 trillion by 2025. Warehouses and logistics facilities are quickly trying to adapt to meet new consumer demand. “Finding and attracting the right labor force was a hot topic before COVID – 19,” says Mehtab Randhawa, Director of Industrial Research at JLL, “With this boom in e-commerce, we’ve seen even more pressure to attract talent in different markets.”

To learn more about industrial real estate in the next normal, download the research report.

JAMES COOK: [00:00:00] industrial warehouses are on a course of change. Building owners are addressing sustainability and they're also making working conditions more agreeable for employees.

This is building places where we look at the world of commercial real estate through the eyes of the experts that study it every day. My name is James Cook. I research real estate for JLL today, I'm talking with industrial expert. May Todd Rendova

Mehtab Randhawa: [00:00:31] I made a run Baba. I am the director of America's industrial research and I cover research for all industrial asset types across the U S.

JAMES COOK: [00:00:40] may Tom, thanks for joining me today.

we've been doing this exercise of envisioning what the future. Over the next year or so is going to be for commercial real estate, given how much COVID has impacted us and what our expectations are for the future. I mean, I do a lot of my work in the retail world and we're seeing a huge impact from e-commerce.

I bet that's been a huge impact for industrial too. Right.

Mehtab Randhawa: [00:01:09] That was a big story in all of 2020, and that's not going away anytime soon. we just saw tremendous, losing volume from the e-commerce sector and no surprises. everyone's staying at home. Everyone's shopping online a lot, including you and me. So we're all contributing to it.

JAMES COOK: [00:01:27] We've had this huge boom in e-commerce and retailers must be scrambling for warehouse space. So what does that meant for demand for industrial properties?

Mehtab Randhawa: [00:01:38] , you know, we keep talking about e-commerce where we think, you know, pure play e-commerce companies are the only ones taking up space but when we look at. The big picture here. It's just not them. it's the company supporting them as well. So like your logistics and distribution companies FedEx ups, all of them help contribute to that demand.

And then, like you said, you know, retailers are scrambling to get into this arena as well. And some of them are not equipped as some of the pure play e-commerce players. So they are engaging themselves, very smartly with, you know, three PL companies, third party logistic companies. Do get that products to customers and compete and be competitive in this crazy e-commerce environment.

So all of that combined is definitely driving that demand for industrial real estate.

 JAMES COOK: [00:02:22] So you've got not only the, retailers and manufacturers themselves, but then also these third party companies , how do you explain that to an outsider? It's kind of like a, a company that will turn key, take care of your warehousing for you. So you don't have to do it yourself.

Mehtab Randhawa: [00:02:38] Absolutely you focus on your expertise, which is supplying a certain kind of product, but then this company will take care of the logistics space. We'll take care of the distribution, getting, you know, the goods to the customers, to the last mile, basically to their doorstep.

 JAMES COOK: [00:02:52] and those third-party logistics companies, are they really growing in number or just growing in their overall demand for space?

 Mehtab Randhawa: [00:03:01] right now, we're seeing them more in the expansion category. So they are really increasing that footprint from what the presence that they already have, because they obviously have a new set of customers that don't want to engage them.

 JAMES COOK: [00:03:12] as we're seeing this increased demand for this warehouse space, this also means a demand for warehouse workers, to pack this stuff and ship it out. Has anything changed about the workplace for those workers or do you expect any changes?

Mehtab Randhawa: [00:03:29] , Definitely. Um, you know, that's a hot topic for industrial landlords to consider for the longest time labor has been an ongoing conversation. we've always had trouble even before pre COVID labor was a hot topic where we would talk about attracting labor and where can we be? Potentially occupies can move to get that label for the warehouse and with this boom in e-commerce, we've seen a lot of pressure on that blue collar labor in different markets.

So that is now a big push to think about amenities and that industrial warehouse segment. We've always in the bus, you know, spoken about amenities and the office space retail space. But now that conversation's shifting they're talking about, you know, childcare facilities at a warehouse. Fitness facilities.

I'm talking about transportation for helping workers get from point a to point B. So definitely something to do, which is not just to attract, but also to retain the labor.

 BP MEHTAB 2-11-21 james-cook_1_02-11-2021_141146: [00:04:24] And

JAMES COOK: [00:04:24] would you say this trend is relatively new? Like, let's say, I don't know, five or seven years ago if I worked in a warehouse, could I expect to have, amenities like this?

 Mehtab Randhawa: [00:04:34] we've seen e-commerce I would say, has been the trigger point for this Air conditioning of warehouses was something we did not hear like 10, 15 years ago, but with more e-commerce companies coming in and bringing in more people to work, to package goods, to ship goods workers are working with 12 hour shifts.

there is definitely that competitiveness to attract them. And to be honest, you know, we're seeing this in the U S now where we're having these conversations globally, we've seen Asia back uh, had more of these kinds of buildings where they would have, different kinds of amenities, right?

At the warehouse facility. We've seen some warehouse facilities even have retail space on them to be able to, again, attract and retain that labor and make a warehouse and attractive place to work as well.

 JAMES COOK: [00:05:18] especially in some of these hotter climates, I can't imagine working inside in the summer and doing, you know, physical work and not having air conditioning. so that's great. And you know, the theme for this research report that you worked on is that things are going to be better.

So it's like we're not returning to normal. What once was we're returning to this new normal that's better than before. And I think part of that better normal is this idea of sustainability and how real estate is built and operated. Are you seeing a push towards sustainability in the industrial space?

Mehtab Randhawa: [00:05:55] We definitely are. We're hearing this from both our occupier clients and the landlord clients. you know, on the occupier side, we've heard sustainability is definitely climbing up on the corporate agenda for a lot of our clients. So we're focusing on that as well, to help them out and address this better.

This is again It's been a conversation that we've had in the boss, but that is an increased focus now, for sure. And we do believe that with occupier setting goals you know, 20, 30 sustainability goals, there will be a heavier conversation on this in the coming next five years.

JAMES COOK: [00:06:28] Talked on this podcast, a bit about corporations setting, for example, nets. Zero goals or, you know, we're going to buy in the next 10 years. JLL has its own goals around, around emissions. How does the supply chain and logistics and warehousing play into that? 

 Mehtab Randhawa: [00:06:47] You know, to be honest, when we talk about sustainability, it's such a wide topic on the industrial side. it goes from, like you said, you know, net zero overall carbon emissions it goes into micro things like paper and packaging. we spoke about increased demand from e-commerce from food and beverage companies.

but all of that. You know, it comes down to how you package your goods and how do you deliver to your customer and you know, renewable sources recycling, all of that is again, part of the whole, you know, agenda topic on the occupier side. Um, besides that do you know, there have been conversations of green and energy efficient buildings specifically on the industrial side, more natural lighting led lighting for what goes to work in.

 Again, more of the human centric approach for you know, blue, blue collar workers to work in a more healthier environment as well, which we, we didn't really address those kinds of topics in the past as much before, but it's all packaged together now and falling under the sustainability bucket.

JAMES COOK: [00:07:46] May Todd, this has really been an interesting conversation. If folks want to learn more, they can download this working better than normal report. just go to J L and go to the insights section and they can find a, not just this, but a whole bunch of industrial insights that you guys have released.


Mehtab Randhawa: [00:08:06] Absolutely. We have a lot that we've spoken about and written about on the subject.

JAMES COOK: [00:08:11] excellent. Well, thank you so much for joining me today. May top. It's been great to catch up 

Mehtab Randhawa: [00:08:15] Thanks James, for having me. 

JAMES COOK: [00:08:17] if you like this podcast, do us a favor and tell a friend about it.

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 Production help on this episode of building places came from Stephanie Kilgore.