Top Issues for Industrial Users: Flexibility Re-Use

WASHINGTON, DC-Corporate real estate professionals are concerned about flexibility re-use of their industrial portfolio. That was one of the major findings in a recent survey by Peachtree Corners, GA-based Industrial Asset Management Council and the Washington, DC-based Society of Industrial and Office Realtors. “A significant 84% percent of respondents indicate that flexibility and re-use potential are issues for them.”
In January 2013, the team commissioned a survey of corporate users of industrial space to learn more about flexibility and adaptive re-use of industrial buildings. The goals of the survey were to understand the current state of industrial facilities portfolios and how they are being positioned toward a future that may well include a change of uses; benchmark the performance of its own portfolios against other companies; learn more about industry best practices in the areas of flexibility and adaptive re-use; and to offer guidance on ways to build in more flexibility and overcome obstacles to re-use.
As firms look to improve the performance of their corporate real estate portfolios, reduce costs, and enhance efficiency, they are seeking new ways to improve the utilization of their facilities. Instead of allowing outdated or excess properties to stand vacant, they are looking for innovative ways to repurpose them, says the white paper, which was produced from the survey.
Another major finding from the white paper is that industrial asset portfolios are aging. Nearly 80% of respondents said that their facilities—including warehouses, research sites, labs, and manufacturing plants—were on average at least 11 years old. And more than 70% said their research facilities were 11 or more years old. Each and every respondent with chemical and gas and heavy manufacturing facilities in their portfolios said that these properties were 11 or more years old.
Another finding was that warehouse/distribution facilities hold the top spot for makeovers, with light manufacturing plants taking a close second. Approximately 60% of respondents who oversaw a re-use project said they converted aging warehouse or distribution facilities. About 58% of respondents with light manufacturing facilities in their portfolio have converted such plants.
One thing to point out is that conversion timeframes vary, depending on property type. According to the white paper, while more than 70% of warehouse conversions took between seven months and two years on average, respondents who converted heavy manufacturing plants into something else said the process took more than two years on average, with some reporting a 36-month time frame.
When respondents were asked how long it took to repurpose a building in their portfolio, their answers were all over the map. According to SIOR and IAMC, that is no surprised, given the diversity of uses and property types. Respondents said that the timeframe depended on a number of factors, the most important of which are the type of building to be re-used and the new purpose intended. Respondents also noted that repurposing typically includes several distinct subsets of activities, each of which comes with its own varied timetable: Analysis; evaluation of options; development recommendations; approval; and design.
By: Natalie Dolce (GlobeSt.com)
Click here to view source article.