As Industrial Moves Into Cities, Developers Need To Embrace A More Personal Touch

For decades, developers searching for land on which to build industrial properties preferred suburban areas for their affordability and ample open space.

But today, some of the most valuable industrial assets aren’t massive facilities out in the suburbs. They are sites wedged into densely populated urban landscapes, as close as possible to consumers. 

“Suddenly the town square isn’t just filled with sedans and bikes, it’s filled with delivery trucks, vans and delivery boxes,” said Greg Pearson, vice president of investments at CenterPoint Properties, which has developed and acquired more than 60M SF of industrial real estate. “Having 150 packages in any given lobby and a truck behind you at every stop sign is the new reality. We want to help cities embrace that.” 

But convincing towns that they’re ready for this change isn’t always easy. Even if residents want their online purchases delivered in under two hours, they may have trouble adapting to the heavily deliverable future. That’s where developers need to employ a more personal touch. 

 As industrial moves into more heavily populated neighborhoods, industrial developers need to reckon with the challenges that come with building in metropolitan areas, from entitlement issues and environmental concerns to working with municipalities and keeping residents’ needs in mind. 

For nearly four decades, CenterPoint has been purchasing and developing properties in and around major population centers. As the company has moved into urban areas, it has developed a “boots on the ground” approach that encourages the development of relationships that last long after the property title has changed hands. 

“Too many developers walk into a city and say, ‘This is what you need and this is what you should do,’” Pearson said. “We come in and ask, ‘What do you want and how can we do it together?’” 

CenterPoint recently acquired an industrial property at 439 East Carlin Ave. in Compton, California. The seller had been operating out of the property for the last 40 years and was looking to wind down his business. Instead of simply brokering a deal to buy the property and then walking away, CenterPoint worked to create a partnership with the seller that simultaneously allowed the seller to maximize proceeds while CenterPoint had the time to find a new tenant. 

“This transaction was the result of mutual trust," Pearson said. "It was far more nuanced than, ‘Hey, I want to buy your property, here’s a check.' We still talk to the seller today, not because he owns more properties we hope to purchase, but because we developed a meaningful relationship with him and his family.” 

This deal wasn’t just beneficial to CenterPoint and the seller but to the city as a whole. CenterPoint worked with local municipal officials to determine what types of industrial tenants would be best for this particular property and the city. Then, the CenterPoint team took to the streets to find the perfect fit.   

The team knew that a logistics company was interested in leasing more space in the city, so they personally pitched the 439 East Carlin Ave. property. Once the company decided on the space, CenterPoint partnered with the city to obtain an entitlement and act as a bridge to expanded occupancy in the city.   

The CenterPoint team believes that partnerships like this will play a key role in the future of American cities in the e-commerce era. Cities have historically relied on property taxes and retail sales receipts. As the latter transitions to online and the local florist shop is replaced by a delivery service, industrial developers are determined to work with municipalities to help them replace that tax base. 

Pearson explained that the CenterPoint team has a tenant-first mantra.

“If we think an occupier is going to be a good fit for our building, we will literally knock on their door and personally take them to tour the asset,” Pearson said. “A lot of companies purchase buildings and kick back waiting for someone to show up and sign a lease. We aren’t afraid of being turned down and are simply looking to connect great tenants with our great spaces.”

This feature was produced in collaboration between the Bisnow Branded Content Studio and CenterPoint Properties. Bisnow news staff was not involved in the production of this content.