By David Weissman

As the industrial warehouse sector evolves to accommodate continually increasing e-commerce demand, both tenants and property managers are turning to product innovations and data-driven strategies to enhance efficiency and maintain cost competitiveness. Tenants are using cutting-edge robotics and advanced algorithms to optimize their supply chain management, while owners and property managers are implementing sustainability initiatives and advanced property technology (proptech) systems to monitor and control facility costs more effectively.

Rising Costs

While overall inflation has moderated, rising costs continue to hamper the greater real estate industry. This is especially true in the logistics sector, where operating costs have been driven up by rising materials, fuel and utility prices, coupled with much-needed investments in advanced technology to help manage inventory and order fulfillment. Labor shortages and rising minimum wages have also pushed costs higher, and the growing demand for faster delivery times has further increased the need for more personnel and more complex systems. Although global supply chain disruptions have eased, inventory management challenges persist.

To address these issues, tenants are investing in automated warehouse management systems, including robotic picking solutions, which boost the speed and accuracy of order fulfillment. These systems reduce labor costs, enhance safety, and limit strenuous manual tasks in warehouses.

For example, tenants implementing robotic picking technology have reported a significant increase in order accuracy and productivity. In one report, a DHL facility increased average pick units per hour from 78 to 150 after implementing robotics, while the order pick rate in a Japan-based footwear operation increased from 100 picks per hour to over 300. These systems also contribute to faster delivery times, which are critical in today’s fast-paced e-commerce environment.

Property managers seek to help tenants combat rising costs in a number of ways. This includes maximizing building footprints and clear heights to accommodate more inventory and improve operational flow. Sustainability initiatives, such as energy-efficient lighting and HVAC systems, are another key strategy, reducing utility costs while advancing environmentally conscious goals. Combined with automated systems and tracking technologies, these efforts can drive down overall operating expenses.

Digital Platforms and Data-Driven Decisions

The rise of proptech is transforming property management with real-time property data analytics and preventative maintenance tools. The rapid adoption by the industry tells the story – the proptech market was valued at $27.3 billion in 2023 and is expected to grow by 15% by 2032, according to Global Market Insights, expanding service offerings, fostering innovation, and simplifying day-to-day property management processes. Property managers are using these proptech platforms to enable more strategic planning and faster response times for tenant issues.

Predictive maintenance also can significantly reduce downtime and operational costs by reducing emergency repairs, extending the life of equipment, and improving tenant satisfaction. A Deloitte report showed that this approach can increase equipment uptime by 10–20%, while reducing overall maintenance costs by up to 10%. E-commerce and last-mile and next-day delivery often means around-the-clock processing and distribution — so disruptions can cause operational nightmares with extremely high costs. According to IndustryWeek and Emerson estimates in the same report, unplanned downtime for industrial manufacturers costs $50 billion.

Digital management platforms facilitate the transition from manual to automated systems, dramatically increasing efficiency. These tools provide real-time access to information and capabilities such as task management, financial operations, lease and risk management and enterprise services. The technology is not only valuable for owners and managers, but for tenants as well, who are often responsible for their own maintenance and repairs within their leased facilities. Their proptech systems streamline maintenance tracking, vendor selection and coordination, and work order management, ensuring production equipment and facility repairs are completed more efficiently and with minimal disruptions. According to security systems provider Forbel, PropTech solutions provide an ROI of 20%, with smart building systems alone cutting energy costs by up to 30%.

The broader economic forces that are reshaping the logistics industry, from growing demand to increasing costs, have created an environment where greater efficiency is critical to the success of warehousing and distribution operations. For property managers, embracing data-driven strategies and innovative technologies is no longer optional—it’s essential for controlling costs, enhancing tenant satisfaction, and ensuring long-term success in a dynamic market.

David Weissman is managing partner at Greek Real Estate Partners, a developer, owner and operator of industrial real estate based in East Brunswick, NJ.