Warehouse Automation Costs are Falling

Costs for automated machinery in industrial warehouses has dropped considerably in recent years and is forecast to continue to be more affordable, according to a new report from JLL.

This is a relief for some owners who are paying higher prices today to lease spaces.

Not long ago, these desired technologies had an estimated 10-year payback period—another metric that has seen reductions.

The average price of an industrial robot has dropped from about $46,000 in 2010 to $27,000 in 2017 and is forecast to dip further to less than $10,900 by 2025 due to lower technology costs, according to data portal Statista.

“This is becoming a much more viable option for occupiers who need a higher level of automation for their business,” said Tom Woolhouse, head of logistics and industrial for Asia Pacific at JLL in the company’s post. 

“You have to be certain that you’re investing in the latest equipment that is most suitable for your business function. If you get that wrong, it’s significant.”

The Automated Guided Vehicles (AGVs) and Autonomous Mobile Robots (AMRs) are the two most widely used semi-automation technologies that are gaining traction in the sector, in part due to falling costs.

For DHL, these assisted picking robots can improve that task by up to 180%. By reducing manual, repetitive tasks for employees in their facilities, it enables staff to focus on value-adding work. 

E-Commerce Driving Need for Automation

Doug Ressler from Yardi’s CommercialEdge Report tells GlobeSt.com that warehouse automation efficiencies are being driven by e-commerce and “last-mile” sales, which increased 2.4% to $5.8 billion in the first quarter of 2022, according to the Census Bureau. 

Ressler said that year-over-year, e-commerce sales were up 6.6% to $15.5 billion while online sales continue to expand and that growth has decelerated since an initial pandemic boost. 

The PwC-ULI Emerging Trends in Real Estate in 2022 study showed that the industrial/distribution sector ranked first for both investment and development prospects for the ninth consecutive year, Ressler added.

“Tenants are paying a hefty premium for new space, with the average price of a lease signed in the last 12 months costing $1.17 per square foot more than the overall average,” Ressler said.

“Spreads between average in-place rents and new leases should continue to grow soon, fueled by robust demand for industrial space and inflation.”