TestFit: Prologis Is Using Our Software to Identify New Warehouse Sites

TestFit, a proptech company focused on real estate feasibility analysis, announced that Prologis is using the firm’s software to help identify new warehouse sites.

TestFit’s real estate feasibility platform provides insights into design, constructability, and costs in early-stage site planning, the vendor said, noting that it has also worked 50% of the top 10 multifamily developers in that sector.

“TestFit has helped existing customers speed their site planning by as much as ten times. It’s incredible to see the success we’ve seen in multifamily applied in the industrial space,” Clifton Harness, CEO and co-founder at TestFit, in prepared remarks.

Prologis Ventures, the VC investment arm of the logistics giant, had been a co-investor in TestFit’s $20 million Series-A round in July 2022, although at the time TestFit only mentioned that the funding was led by VC firm Parkway Venture Capital.

“Innovation and staying ahead of what’s next has been fundamental to our company’s forty-year success,” said Will O’Donnell, Prologis Ventures managing director in prepared remarks. “TestFit is a perfect example of how we continually invest in new technologies such as AI that empower our employees.”

Warehouse site identification is a critical aspect of logistics because location, and not rent, is the top priority for industrial tenants. As GlobeSt.com previously reported about research from Prologis, first, rents make up a small cost in the overall supply chain, leaving tenants room for flexibility. Second, urban population growth and changes in consumer expectations, both in online and in-store shopping, have driven user demand near population centers.

Industrial rent is about 5% of supply chain costs. Usually, improving supply chain strength helps meet consumer demands and results in improved revenue and profitability through productivity increases. They are enough to warrant increased real estate costs.

That falls in line with estimates from CBRE’s Supply Chain Advisory, which says that real estate’s share of a warehouse user’s logistics spend is between 3% and 6%. Transportation is the big cost driver, running between 45% to 70%. The right locations can help reduce those major costs. The second biggest portion of costs, 15% to 25%, are labor.

But real estate does remain a cost. TestFit says that its software lets a company view multiple deal models next to one another within the same site and can pull up detailed financial data including land cost, hard cost, soft cost, and project revenue in a deal database.