It wasn’t so many years ago that designing and constructing a warehouse unit needed to conform rigidly to institutional standards. However, as we move away from more conventional factors and instead focus more on things like sustainability and intensification, these standards are now having to adapt, and quickly, to the changing landscape of the industrial and logistics market.

First things first though. What are these institutional standards, who defined them and perhaps most importantly, do they still matter?

Fundamentally, institutional standards derived from investors’ and developers’ views on what most appealed to the majority of occupiers. This was then coupled with how lettable the unit would be in the future once the original tenant moved out. As such, these standards were then applied to things like dock ratios, office content, floor slab loadings, yard depths and site densities to name but a few.

In the past these standards were driven predominantly by the grocery retailers who were responsible for the largest occupational demand prior to the explosion of online retail. For example, facilities larger than 500,000 sq ft would typically, by default, be designed as a cross-dock unit so that grocery retailers could easily process perishable and fast moving goods in and out of their facilities.

Alongside the obvious lease length and tenant covenant strength, these were the major factors considered by the majority of investors and developers at the time.

However, recently there’s been a distinct change in what constitutes an institutional development. Once again, this has been driven by occupiers and now that the grocers are considerably less active than in their ‘90s heyday, this time it’s the online retailers that are leading the charge.

For this reason, changes include pushing up haunch heights in order to accommodate mezzanines, which are increasingly multi-tiered, enabling automation both now and in the future and higher racking solutions in order to maximize the cube. This in turn drives greater floor loadings and deeper yards to accommodate a wider vehicle fleet. All of this is now being done on a much tighter site density.

There are also other factors to consider, such as the increasing importance of sustainability, especially if we are to hit net zero carbon targets by 2050. With this in mind, people are turning to certain benchmarks. GRESB, for example, provides access to comparable and reliable data on the ESG performance of investments.

So by incorporating design elements like increased photovoltaics, enhanced landscaping and bio-diversity and EV charging for cars, HGVs and bikes, developers are able to achieve higher scores across their portfolios, which in turn makes them far more attractive to investors.

In short, institutional standards have had to evolve in order to cater to today’s occupiers. Of course, developers and investors will always have a check list of essentials when it comes to building warehouse units, but what’s clear is that these days this is certainly not set in stone, steel, or even sustainable timber.

Further information

Read more: Big Shed Briefing