Friday, August 16, 2013

All #CRE industrial buildings are created equal...aren't they?

I provide Location Advice to owners and occupants of industrial buildings in Southern California. Today's post deals with the features that define the different types of industrial buildings. If you are a CRE practitioner, no need to read could have written this post. However, if you are an occupant or a service provider, continue reading. There are three main categories of industrial buildings...manufacturing, distribution warehouses, and flex. So how do I know which category appeals to the genre of industrial occupant? Continue reading and I will draw the distinctions.

Manufacturing Buildings: VIDEO Manufacturing buildings are locations...generally constructed of concrete, concrete block or metal...where products are made, stored and shipped. The raw materials of the manufacturing process are generally stored on site (many times in an outside storage yard so as to not poach inside floor space) as well  as the machinery that makes the products and the employees that operate the machinery and support the manufacturing process. These buildings can be "freestanding" or parts of a larger building but typically have greater power feeds into the building, 10-30% of the total square footage in office space, ground level loading doors vs truck high loading doors (some may have both), fenced outside storage areas, and a warehouse clearance of 14-24' under beam in the warehouse/plant area. Because these locations have more office space typically, they also have more parking spaces...a minimum of 2 parking spaces per 1000 square feet of building. Manufacturers can generally operate in a lower cube building because their plant is consumed with machinery and raw materials vs finished goods waiting to be shipped. Most products are made and shipped within as not to inventory a large amount of finished goods. A distribution warehouse as described below will typically not fit a manufacturing requirement however some distributors may be able to occupy a manufacturing building especially if the building is equipped with ground level AND truck high loading.

More important...power, office space, outside yard storage space
Less important...loading, warehouse clear height

Distribution Warehouses: VIDEO Distribution warehouse buildings are locations...generally made of concrete (because of the wall height)...where products are staged, stored, and shipped. Generally no manufacturing or assembly is done on site. Consequently, fewer support staff and no raw materials are housed on site. Distribution warehouses require truck high loading, warehouse clearance of a minimum of 24' and truck turning radiuses of 130' or more. The ideal set up for a distribution warehouse is a rectangular building with "cross dock" loading so that the point from stored goods to loading doors is minimized. Because these buildings typically house fewer employees, the premium on office space and parking is lessened. These buildings generally have a parking ratio of 1 parking space per 1000 square foot of building space.

More important...loading, warehouse clear height, truck turning radius
Less space, parking, power, outside yard storage

Flex (or Flexible): VIDEO The personal computer boom of the early/mid-1980s gave birth to a new industry and consequently a new type of industrial building...the flex building...formerly referred to a Research and Development building. Since computer companies housed a large number of employees, the typical industrial building didn't contain enough office space or enough parking for additional office to be added. Developers of R and D buildings created the "mezzanine second story" which enabled a smaller lot to accommodate a larger building. The silicon valley in Northern California and the Irvine Spectrum in Irvine, California is populated with flex buildings. These buildings are locations...generally made of concrete and glass because they are modern, that house a high technology manufacturing or assembly function and a large employee, accounting, purchasing, sales, sales support, customer service, etc. Parking, power and office percentage and layout are the important features with these buildings. These buildings are generally parked with 3 or 4 spaces per 1000 square feet of building and in some cases can accommodate a use that requires 100% office. Less important are loading, clear height in the warehouse and outside yard storage.

More space, parking, power
Less important...outside yard storage, loading, warehouse clear height.

The world is built on exceptions. True with locations as well. You may have some of the characteristics of all of the above in your location and it functions just fine. The above are true in the "classic" definition of the building types.


  1. Hi Allen,

    I love to read your blogs and watch your videos. Since I have been in the commercial real estate business all my career, but not in industrial, I love to learn all of this. My question is are we missing any categories here under the Industrial section? Please let us know as we try to be as up to date in terminology in all areas of expertise. Your feedback is appreciated! You are a nugget of gold to us and we enjoy learning all of these segments of the business.


    1. Linda,

      I'll take another look. I recall the categories in TBL being a bit clunky an off target...but I will refresh my memory.

      THANKS for embracing my stuff! It really means a lot to my "little voice" in SoCal.