REAL ESTATE NEWS

Despite early predictions that automation would shrink warehouse needs, recent data shows it is reinforcing structural demand for modern logistics real estate, according to Prologis Research.

By 2025, roughly 30% of modern logistics facilities will include some form of automation, up from 20–25% five years ago, and built-to-suit projects incorporating automation now account for around 40% of new developments. Top North American retailers that have deployed automation have gained more than 700 basis points of market share between 2019 and 2025, while warehouse square footage per unit of sale has held steady or grown, demonstrating automation's role as a strategic differentiator in supply chains.

Warehouse automation comes in several forms. Full automation refers to warehouses where storage, retrieval and internal movement are handled entirely by automated equipment, typically with fixed AS/RS systems using cranes, shuttles or lifts. These facilities usually require high clear heights of 32 feet or more, flat floors and wide column spacing. Adoption of full automation remains limited, at around 3-5% of warehouses. Partial automation supports specific tasks while human workers continue core operations. Autonomous mobile robots and automated guided vehicles, now found in roughly 10–15% of facilities, provide faster throughput and flexible deployment in standard warehouses with clear heights of 25–35 feet. Other partial automation technologies include fixed conveyance or sortation systems, adopted in 7-9% of warehouses, and robotic picking or piece-handling systems, present in 4-5% of facilities, the report said.

Companies are turning to automation to overcome labor shortages, manage complex supply chains and maximize existing space. Flexible modular systems, which require roughly one-third the capital of fully automated AS/RS setups, are expanding quickly, while fully automated systems remain rare due to high costs and specialized facility requirements.

The effects on logistics real estate are tangible, the report said. Automation improves service levels, expands distribution networks and allows operators to increase output in older or infill warehouses. Automated facilities command higher rental rates, longer lease terms and stronger tenant retention, adding value for both users and owners. Prologis notes that nearly 10 percent of new leases are now signed specifically to incorporate automation.

With adoption growing and capital conditions improving, Prologis forecasts that up to 50% of modern warehouses could feature some form of automation, dominated by flexible systems, by 2035.

Source: GlobeSt/ALM