In today’s industrial CRE market, the future is already here—and it’s wired, automated, and vertical. Across the globe, warehouse developers are no longer just building for what is—they’re building for what’s next.
A host of SIOR experts from California to Canada to China are seeing the same trend: AI and robotics are fundamentally changing industrial CRE.
In the Bay Area, where land is tight and costs are high, developers are going vertical and thinking ahead. Tim Vi Tran, SIOR, president of The Ivy Group In Fremont, California, has seen firsthand how the integration of AI is changing not just operations, but design philosophy.
“The old debate of man versus machine is over — it’s now man and machine,” Vi Tran says. “We’re not using AI to eliminate jobs — we’re using it to enhance them.”
That philosophy is shaping infrastructure decisions. “Developers are installing extra power and flexible networks upfront,” notes Tran. “Waiting for a PG&E upgrade later could take a year and cost six figures. You’ve got to think ahead.”
Multi-story fulfillment centers are now standard. “You can’t expand outward anymore. So, you go vertical.”
But as automation expands, the human element still matters — though the skill set is shifting. “You still need people to oversee systems and make smart calls,” adds Tran. “But they need training in data analytics and robotics. The old-school supply chain manager role is gone.”
He believes AI is already influencing warehouse specs. “If AI can analyze your data and recommend facility specs, that’s a game-changer. It’s already happening. If you’re not on board, you’re falling behind.”
The payoff is tangible. Tran cites companies like Foxconn, in China, boosting manufacturing throughput by 30% to 50%. “Plus, you cut labor costs and errors. It’s an all-around win.”
China: Stacking Efficiency with Innovation
Half a world away, China is pushing the envelope on vertical warehouse models. Bjarne Bauer, SIOR, principal at Sofia Group in Beijing, says mixed-use industrial buildings are (literally) taking off.
“We’re seeing manufacturing on the ground floor, warehousing above, and livestream product marketing on the third,” Bauer said. “It’s a dynamic setup.”
As with North America, workforce training is an issue, but progress is visible. “The gap’s shrinking,” says Bauer. “Workers need to master software, remote devices and seamless product flow.”
AI is also making inroads. “Data already optimizes production flow,” he adds. “It’s only logical for warehouses to follow. AI might even shrink the space we need.”
Flexibility is top of mind. “Being ready for new robotics, shifting SKUs or even livestreaming product demos from your warehouse—that’s the new standard,” explains Bauer.
Canada: Building for What’s Next
In Montreal, Robert Cressaty, SIOR, co-CEO of Landmark, is advising clients to build with the future in mind. That includes 46-foot clear heights, thickened floors, and high-capacity power systems—often to support technologies that don’t even exist yet.
“You have to plan with the mindset that today’s investments might be obsolete tomorrow,” says Cressaty.
He emphasizes that simply adding robots isn’t enough. “Automation suppliers often overlook how their equipment fits into the bigger picture,” Cressaty notes. “That leads to issues like heat buildup or floors that can’t handle the load.”
Specialized teams are essential. “Installing the tech is just the starting point,” says Cressaty. “You need warehouse automation experts who understand how everything works together.”
Like Tran, Cressaty sees training as a weak link. “Staff are expected to handle new tech without proper training. There aren’t enough consultants or programs to bridge that gap.”
Vertical design is also gaining ground, driven by high land costs—especially in Vancouver, where $5 million per acre isn’t unusual. “Vertical distribution centers should dominate the market,” Cressaty expresses. “It’s the only sustainable option.”
AI is shaping design decisions too. “AI could assess SKU movement, truck turnaround times and more, then deliver a design,” he adds. “That’s where we’re headed.”
And the returns can be significant. “One client boosted order fulfillment 50% with vertical robotics,” says Cressaty. “They jumped from 1,000 to 1,500 orders daily.”
All three experts agree: warehousing is evolving from passive storage into an active, intelligent ecosystem. And with AI and robotics accelerating that shift, standing still is no longer an option. A recent McKinsey report echoes their experience, estimating warehouse automation can cut operating costs by up to 40% while increasing throughput by 25% to 35%.
As Bauer put it: “Flexibility is the goal—being ready for new robotics, shifting SKUs or even livestreaming product demos from your warehouse.”
The question isn’t whether warehouses should prepare for the future; it’s how quickly they can adapt.