Live from NAIOP: Switching gearheads

So it took us a little while to report from the National Association of Industrial and Office Properties (NAIOP) annual conference in Seattle - we couldn't let IDI and J.P. Morgan's new partnership go unnoticed last month. That does not make the knowledge gained from the session entitled, "Industrial Developments: Trends and Opportunities" any less relevant, especially with a lineup featuring Tom Senkbeil, executive vice president and CIO of Indianapolis-based Duke Weeks Realty Corp., who served as moderator; Gene Reilly, senior vice president and director of development at Boston-based Cabot Industrial Trust; Luis Belmonte, managing director at San Francisco-based AMB Institutional Realty Advisors Inc.; and John Seiple, COO of North American real estate operations for Aurora, Colo.-based ProLogis.

* On parking and flex properties: "More people are being jammed into less space all the time," says Belmonte. "If you're doing space that's going to have a significant buildout, you better have 5-to-1 or 6-to-1 parking for your projected office area or you're just going to get your ass kicked."

* The results of a Cabot survey indicated that 52% of respondents do not need clear height in excess of 26 ft.; 43% do not need ESFR; and 70% could work with truck courts of 120 ft. or less. Still, if the market demands 30 ft. clear height or more - New Jersey and the Inland Empire, for example - then you'd better have it.

"If the standard in the market is 30 clear, you'd better be 30 clear if you want to compete," says Reilly. "But it's very interesting that the utilization isn't quite what you'd think it would be."

* On international expansion, ProLogis is targeting Europe with visions of a European Union gold mine. "We think Europe is as big an opportunity as what we've built in the U.S.," says Seiple. "If you think about the changes in Europe and the borders coming down, rather than distribution on a country-by-country basis, it's a pan-European distribution strategy, and today there's really no one else in Europe providing that opportunity. Most of the developers in Europe still tend to think on a country-by-country basis.

"Acquisitions are hard to come by, so we'll continue to develop throughout Europe," he adds.

* On e-commerce and distribution: "One of the things we're attempting to do is cultivate people in certain parts of the third-party logistics business," says Belmonte. "We think a lot of these damn gearheads couldn't find freight if their life depended on it, and they're not going to be able to distribute it themselves. They're going to have to hire somebody to do it for them."

to do it for them."

* And e-commerce itself: "This is the first run of the e-commerce roll out," says Seiple. "They have no baseline to structure [distribution] around. They have no existing industry to understand what their distribution network is, and their sales forecasts have to be random at best.

"There's going to come a real reconfiguration of these distribution networks 18 to 24 months down the road," he adds.

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