5 Tips On Doing Industrial Deals In The Baltimore-Washington Corridor
With space at a premium and a variety of challenges in managing labor and inventory, getting industrial deals done can be tricky in this market. Speakers at Bisnow's Baltimore-Washington Industrial & Logistics event on Wednesday offered these five tips on how to navigate this complex industry.
1. Give Up A Few Perks
Selecting the best location in a crowded field sometimes requires making a few sacrifices. Kane 3PL's facility in Lanham might have only half as much truck parking as president Ron Granville would like, but the location offers easy access to Interstate 95.
“Real estate is expensive, so we sacrificed truck parking," Ron told the crowd of more than 200 real estate professionals who turned out for the event.
Since tenants want to move as close as possible to urban markets, they’re easing up on some “must-haves,” including the length of the truck courts, ceiling heights and parking requirements, Chesapeake Real Estate Group principal and managing partner Jim Lighthizer says.
2. Location, Location, Location
The demand for space is also pushing up rents, from $4/SF to $7 or $8 for some good infill locations, Jim says. But tenants are less concerned about rent than they are about location and transportation costs, according to many of the panelists.
“We’re in the transportation sector, so we have to get it there faster,” says LaserShip SVP Josh Dinneen (pictured). “We have to be closer to the metro center.”
3. Manage Inventory
Offering customers an omnichannel experience is critical in retail delivery, says St. Onge Co president Mike Jones.Omnichannel means that a shopper for, say, Crocs shoes has a seamless experience regardless of whether he buys on the website, the brand’s own store or a third-party retailer, such as Kohl’s.
But managing inventory becomes a challenge as you wind up with warehouses within warehouses that stock supply for these various channels. What happens when your supply of Crocs sandals for Kohl's runs low—? Do you dip into the e-commerce pool to give it to the Kohl’s customer when the supply runs out?
4. Pay Attention To Labor Rules
Several panelists said labor is their biggest challenge—finding talent, retaining it, paying for it and grappling with regulatory issues. Stringent hours of service regulations, which limit how many hours truck drivers can be on the road, and OSHA rules (not everyone can drive a forklift) are some of the challenges in the logistics industry, Kane's Ron Granville (right) said.
5. Reuse Existing Buildings
Since land is scarce in this market, redevelopment is key, says Morris Ritchie & Associates principal Tim Madden. City and state officials will often ease up on regulations if you can reuse an existing building rather than build one from scratch. He’s pictured (left) next to MRP Industrial co-founder Reid Townsend.
"Howard, Anne Arundel and [Baltimore] city all want to fill up an empty building," Tim says.
A prime example of a recent redevelopment is the Baltimore-Washington Logistics Center, where the event was held. Manekin has redeveloped the 1M SF industrial complex in Jessup, once the site of Giant Food’s distribution hub. Pictured is the event moderator, Manekin Capital Markets SVP and director Owen Rouse.
Companies are hunting industrial properties in this market so they can reach the estimated 10 million people who live in the Baltimore-Washington corridor.
“That’s what’s driving activity here,” says Cushman & Wakefield managing senior director Michael Elardo (pictured). “We’ve leased up a lot of product. Where’s the next redevelopment?”
