The Future of Flex: Emerging Trends and Innovations in the Industrial Market
Specializes in providing actionable insights into the commercial real estate space for investors, brokers, lessors, and lessees. He covers quarterly market data reports, investment strategies, how-to guides, and top-down perspectives on market movements.
Many investors, buyers, and developers are currently following an exciting market sector: the flex industrial market.
These streamlined properties go considerably further than traditional warehouses, offering agile solutions and flexible options.
They're currently in high demand due to limited development and demolition of existing buildings. Therefore, they offer immense potential for savvy investors, buyers, and developers seeking to meet the evolving needs of modern businesses.
Unmodernized warehouses are no longer meeting the needs of most businesses in today's fast-paced and changing landscape. The lack of smart features driven by technological advancements and evolving consumer demand has resulted in higher vacancy rates.
Today's developers can build flex industrial from the ground up or renovate an unmodernized warehouse or storage facility.
To begin, here's a definition of a typical flex industrial property and why more of today's businesses require its features.
Defining Flex Industrial Properties
Today's flex industrial properties are typically designed for multi-tenant use and can be leased for various uses, such as office, retail, storage, or a combination.
Flex buildings often feature clear-span construction, large loading docks, high ceilings, and cold storage for tenants storing temperature-sensitive items. Small office spaces are often found tucked into a corner of the main warehouse.
Let's explore some more valuable insights for commercial real estate investors and developers, including new innovations that will shape the future of the flex industrial market.
One of the most exciting trends: the invention and integration of new technologies.
Automation and Smart Technologies
Flex warehouses and distribution centers are increasingly adopting robotics and artificial intelligence (AI), tools that manufacturers utilize to build consumer and business goods.
While many of us have seen robotics at work within an automobile assembly line, they're equally busy within other industries, from agriculture to pharmaceuticals.
An additional tool you may not be familiar with is the Internet of Things (IoT). This is actually more of a network than a tool, as it connects interrelated devices so they can exchange data with each other and the cloud.
IoT devices used within flex industrial buildings are usually embedded with technology such as sensors and software and can include mechanical and digital machines and consumer objects.
In addition, many tenants are increasing their competitive edge with tech tools such as:
- Automated storage and retrieval systems (ASRS);
- Autonomous mobile robots (AMRs); and
- Smart sensors that enable real-time inventory tracking.
Another vital innovation gaining ground in residential and commercial real estate is ecologically friendly, energy-efficient features.
Sustainability and Green Features
Environmental concerns about climate change and global warming are nothing new. As these concerns continue to grow, the flex industrial market is embracing sustainability and green features.
CRE developers are incorporating energy-efficient designs, renewable energy sources, and green building materials to reduce the carbon footprint of flex spaces. These include solar panels, LED lighting, and water conservation systems.
Research has found that industrial buildings that qualify for Leadership in Energy and Environmental Design (LEED) certification effectively lower energy bills while adding features that keep tenants healthier, such as cleaner air and additional sunlight.
Additional eco-friendly practices, such as sustainable packaging materials and waste reduction strategies, are also becoming more popular.
By prioritizing sustainability, investors and developers of flex industrial properties can meet the demand for eco-friendly CRE spaces, often with lower energy costs.
Flex industrial properties are also popular with companies that depend upon e-commerce for their sales, as they're ideal homes for micro-fulfillment centers.
Micro-Fulfillment Centers and Last-Mile Delivery
While e-commerce made gradual inroads before 2020, the arrival of a global pandemic transformed names like Amazon, Wayfair, and eBay into household words.
Even after the end of the pandemic, e-commerce continues to explode. Businesses with the ability to provide overnight delivery have gained a major competitive edge (free overnight delivery is even more valued by consumers). This has led to the emergence of micro-fulfillment centers housed within flex industrial spaces.
These compact, technology-driven facilities are strategically located in urban areas to enable fast, last-mile delivery. By leveraging automation and data analytics, micro-fulfillment centers can efficiently process online orders and ensure timely delivery to customers.
Flex industrial properties are especially well-positioned to capitalize on the growing demand for quick and convenient delivery options.
Another trend that has resulted in increased demand for flex industrial space: relocation of our population, especially to urban areas.
Population Shifts and Urbanization
While the first months of the COVID-19 pandemic saw remote workers head to remote areas, urban centers are now popular destinations, especially those with moderate cost of living data.
In early 2024, more people headed to Orlando, FL; Charlotte, NC; Tampa, FL; San Antonio, Tx; and Houston, TX than any other big city.
These population shifts are impacting the demand for flex space in these and similar geographical areas, as many potential tenants will require last-mile delivery, urban logistics, and small-scale manufacturing.
Investors planning to purchase or develop a flex industrial property should closely monitor demographic changes and identify cities with high urbanization rates. These will help minimize risk and encourage higher rental rates.
While investments and developments in flex industrial are viewed as some of the most potentially lucrative, every investor should identify the challenges of different cities by preparing a data-driven business plan.
Meeting Challenge With Innovation
Rising construction and materials costs and skilled labor shortages continue to pose significant problems for residential and commercial real estate developers.
However, continued innovation may provide cost-effective solutions. For example, adopting prefabricated construction methods can reduce both costs and labor requirements, and the right technology can enhance the productivity of almost any workforce.
Win Commercial Projects & Outperform Your Competitors by Knowing What's Happening in Your Area
MyEListing.com provides commercial vendors looking for new projects with up-to-date market intelligence on which commercial property owners need construction work, when they need it, and where they need it.
Make finding new commercial real estate projects easier than ever with MyEListing's Vendor Client Connection Program.
Other recent articles
Article Search
Share
All Article Categories
