Building for E-Commerce

How can a developer attract e-commerce tenants? Speakers at NAIOP's E-CON offer advice on what's desirable and what to avoid when planning an e-commerce facility.

While retailers prefer build-to-suit to speculative distribution centers for their e-commerce needs, speed to market is essential. For that reason, developers would do well to line up well-located land if they wish to attract e-commerce tenants. And when they build traditional bulk warehouse facilities in locations that could accommodate e-commerce, they would do well to plan for easy implementation of the additional elements required in these facilities. So concluded speakers on the “Building Elements 101” panel at NAIOP’s first annual E-commerce conference, E.CON, which took place late last week in Phoenix.

Finding sites is especially important as it grows harder to line up desirable locations, noted Jim Condon, chief development officer of Seefried Industrial Properties. And once located, it also helps to get them entitled to help speed the process.

E-Commerce Logistics: The Role of 3PL Providers

E-Commerce Logistics: The Role of 3PL Providers

In identifying and laying out the property, advised Matt Brady, regional vice president & architect for Ware Malcomb, the developer should ensure it can be converted for single or multiple tenant use, with the ability to adjust parking as needed. Employee-heavy e-commerce properties require more parking, while bulk distribution properties need more bays for trucking. Tenants requiring both bulk and individual fulfillment need to provide for a well-demarcated combination of needs. And parking is not the only external concern: It pays to allocate land for stormwater retention, he advised.

Speakers on Friday’s panel “E-commerce Logistics: The Role of 3PL Providers” further noted the importance of separating the employee parking from the truck bay area from a logistical perspective, while from a personnel perspective the security of the employee parking is important, advised Lonny Warner, vice president of operations, technology and logistics services for Menlo Worldwide. Indeed, when selecting a site, it’s best to avoid bad neighborhoods, pointed out David Parks, managing director for FedEx Trade Networks.

The people-heavy aspect of e-commerce facilities also raises new concerns within the building. For instance, the properties may operate 24/7, with three shifts of workers requiring increased HVAC and lighting usage, along with greater building access, noted Parks. And that greater building access necessitates implementation of greater security measures at the exits.

The increased number of personnel brings additional challenges, as well.  For instance, the demand for bigger and higher distribution centers can make it tough to adhere to building codes, Brady noted. For instance, recent codes have reduced the distance of travel to an exit, but the larger buildings with increased numbers of mezzanine levels run counter to that. The developer must come up with alternate methods for smoke and life safety, he affirmed.

Yet the number of mezzanine levels is key to success, Brady stressed, making building height critical. While typical bulk warehouses have 32 to 36 foot clear heights, e-commerce requires 40 feet—with those few additional few making it possible to add an entire mezzanine level, significantly increasing the productivity of the distribution center. (Merchandise can only be stacked as high as a person can reach, noted Bruce Welty, CEO of Quiet Logistics, so higher stacks don’t help much unless the mezzanine levels are provided to permit that accessibility.)

Less important than the height is the evenness of the floor, agreed several speakers on the 3PL panel. On the other hand, Welty noted, cleanliness can be very important to the perception of the purchaser opening their box of merchandise. Painted floors and dust filters can make a real difference.