Use of More Automation for Material Handling Systems Ahead for Industrial?

John Guinn, VP of development for Wonderful Real Estate Development.

Part 2 of 2 BAKERSFIELD, CA—In part one of this two-part Q&A, John Guinn , VP of development for Wonderful Real Estate Development , said that the central valley has the land and infrastructure to facilitate multi-million square foot distribution centers and bolster today’s distribution demands. In part two of the exclusive Q&A, Guinn discusses the biggest misconception about the Central Valley industrial market, what types of companies are best suited for the area, and what national industrial trends we will be talking about 12 to 24 months from now. GlobeSt.com: What types of companies are best suited for the Central Valley industrial market? Guinn: From a distribution standpoint, companies with mega-box requirements and advanced supply chains will see benefits from being located in the Central Valley. Recently we have seen super regional hub and spoke models; bi-furcating distribution with other established submarkets, such as the Inland Empire; omnichannel distribution; and e-commerce fulfillment requirements choose the Central Valley as the best location for a new distribution center. Companies desiring a single West Coast distribution center serving the entire western 11 states plus Hawaii have found the Central Valley to be most cost effective. From a manufacturing perspective, unique requirements will find a lot of benefits that cannot be found outside the Central Valley. The land allows for customized site plans while many municipalities welcome the requirements with fewer hurdles. Utilities such as power, water, gas, and rail needed to sustain the operation are also readily available. GlobeSt.com: What is the biggest misconception about the Central Valley industrial market? Guinn: The Labor. The Central Valley, especially the Bakersfield area, has an abundance of quality labor for both skilled and unskilled positions. When compared to the Inland Empire, the Bakersfield area has enough labor to sustain about 400 million square feet of industrial manufacturing, warehousing and distribution centers. Employers will also find a unique culture of loyal, hardworking employees who, given the lower cost of living in the Central Valley can afford a high standard of living compared to other locations.  Additionally, e-commerce fulfillment facilities can find a reliable and sustainable temporary labor supply during peak fourth quarter seasons which aligns well with local agricultural labor seasons. GlobeSt.com: What does the future hold for the Central Valley industrial market? Guinn: The future of the central valley is largely predicated on the continued rise of super regional distribution models, mega-box distribution centers, the growth of e-commerce and the competitive demand for labor.  E-commerce companies and companies developing super-regional models serving the entire Western 11 states from a single distribution center will find the Central Valley to offer many advantages particularly companies that will benefit from the ability to utilize a readily available seasonal labor supply to meet Christmas demands.  Companies will find that many seasonal employees will return year in and year out reducing training and administrative costs as well improving overall efficiency. GlobeSt.com: What national industrial trends will we be talking about 12 to 24 months from now? Guinn: E-Commerce will continue to change the face of industrial real estate. We are just beginning to see the widespread use of final mile facilities, so that will be the future within major MSA’s. As the e-commerce boom continues, we will see more mega-box warehouses feeding the final mile facilities. Inside the box, as technology continues to advance we will start to see the use of more automation for material handling systems and pick-pack systems and the need for buildings to better fit those changing systems.  Even with increased automation I believe a high quality and available labor supply will be ever more important for warehousing, in particular e-commerce fulfillment centers.  Companies located in those areas with ample labor that can be sustained will certainly have an advantage.