The high-end shopping mall of the past has now been replaced by warehouses and delivery trucks. Business giants like Facebook, Amazon, Apple, Google, and Netflix are shaping virtually every industry. Artificial learning, machine learning, and automation are on the rise.
It has never been more challenging to be an executive making decisions about industrial property than it is today. Manufacturing, production, distribution, and fulfillment have all changed significantly in the last decade, with their progress shaping the future of work. Industrial buildings—just six-sided boxes with four walls, a roof, and a foundation—can lead to magical outcomes for companies. After all, within these four walls, the e-commerce revolution has transformed business as we know it.
They are where Tesla builds its all-electric self-driving cars with robotic arms on assembly lines. They are where Apple builds the world’s finest computers, the ones that are just as beautiful on the inside as they are on the outside. And they make it possible for Amazon to deliver virtually any item we need quickly, from distribution centers located in every major city.
But before these magical outcomes could happen, these companies had to find the right buildings. They had to consider location, size, and cost. They had to see empty warehouses and imagine their potential. They had to stand exactly where you do today.
As the leader of a business that relies on industrial property, you too face numerous decisions. What kind of building will support the growth your business has planned for the next decade? Should you renew your lease, or should you move elsewhere? What experts will you need to transform a vacant building into the heart of your business? These are tough, expensive decisions, involving large amounts of money and hours of employees’ time. Smart real estate choices can contribute to the success of your business, while poor decisions can spell disaster.
You have already made a smart choice by picking up this book. I am a longtime industrial real estate broker, and I have guided hundreds of executives through the same process you are embarking upon. In this book, I will walk you through the time-tested processes I use to guide executives toward informed real estate decisions to help their company thrive.
TIMELESS PRINCIPLES
First, I will break down the different industrial property markets. I will give you a quick snapshot of major trends, the latest technology, and the major players. I will discuss how your knowledge of each of these factors can help you best manage your real estate footprint.
I will lay out the types of businesses that utilize industrial properties: third-party logistics, e-commerce, food and beverage,
automotive and aerospace, medical supply, life science, and more. Each business has different demand drivers accelerating in today’s economy and changing landscape. However, all businesses require the same fundamental principles for their real estate projects, regardless of industry and circumstance.
Amazon CEO Jeff Bezos, who runs the most prolific e-commerce business in history, told Forbes magazine, “If you want to build a successful, sustainable business, don’t ask yourself what could change in the next ten years that could affect your company. Instead, ask yourself what won’t change, and then put all your energy and effort into those things.”
In real estate, all leaders require a high-performance team, the best possible lease economics, the perfect property fit, and a seamless transition into their new space. Getting there is a long, complex process—one that I have assembled, battle-tested, and refined over several decades with the help of my colleagues and an elite group of trusted partners.
I will share valuable lessons from trusted collaborators in project management, technology, moving, architecture, and more. I will walk you through the process of assessing your current environment, brainstorming future plans, and planning your next real estate move. I will discuss who should be on your project team and guide you through creating a successful project timeline. Then I will illustrate how to best engage the market, prepare your letter(s) of intent, and negotiate a lease that is a win for everyone.
I have devoted an entire chapter to tenant improvements and all of the warehouse-specific improvements you will need to incorporate into your industrial property. I have included checklists for moving into your new facility, expectations for ongoing support, and a platform for how to scale your operations. I have even thrown in a primer for those leaders who want to take their industrial real estate skills even further and become investors.
Think of this book as a manual of strategies and tactics you can reference when you run into a challenge and are unsure of how to proceed. The word “intelligence” is important in the title of this book because the definition of intelligence, “the ability to acquire and apply knowledge and skills,” truly sums up how a team of real estate professionals can help executives make informed decisions.
What will become abundantly clear throughout this book is that there is no right or wrong way to acquire industrial property for your business. There is only a better way than the last time. Real estate is what author Simon Sinek calls an “infinite game.” As Sinek wrote in his book The Infinite Game, “In finite games, like football or chess, the players are known, the rules are fixed, and the endpoint is clear. The winners and losers are easily identified. In infinite games, like business or politics or life itself, the players come and go, the rules are changeable, and there is no defined endpoint. There are no winners or losers in an infinite game; there is only ahead and behind.”
WHY LISTEN TO ME?
As a broker, I specialize in keeping executives ahead in the infinite game of commercial real estate. The best way I can describe my role is with an analogy from Ryan Holiday’s Ego Is the Enemy, where he describes a person in the old Roman patronage system called the anteambulo, a word that translates to “clearing the path.” An anteambulo always preceded their patron. They cleared the path, communicated messages, and generally made the patron’s life easier.
Like that anteambulo, my job is to mesh my knowledge and skills with your organization and vision, and then walk the path with you. Like all commercial real estate brokers, I work entirely on commission. That means if there is no solution and agreement, I receive no compensation. My team only succeeds when you, the client, succeed. My favorite quote from JJ Watt, defensive end for the Houston Texans, sums this up perfectly:
“Success isn’t owned, it is rented, and rent is due every day.”
My career spans more than five hundred real estate transactions, encompassing 5 million square feet of property and roughly a billion dollars in value. I have worked with multiple Fortune 500 firms, public companies, large privately held companies, and high-net-worth individuals. I regularly work with C-suite executives on multifaceted projects, and I am always challenged to keep increasing the value I can bring to the table. Many of my clients helped me create this book, and I am honored.
My firm, Lee & Associates, started four decades ago with just a few small offices in Orange County, California, and has since expanded into sixty offices throughout North America, with partners in the UK and other European countries. I started with the firm sixteen years ago as an assistant and moved up the ranks to my current role as senior vice president and principal. I have a vested interest in the firm’s success, and I have the ability to help shape the company’s policies and platforms to best accommodate our clients’ needs. I am now part of Lee & Associates’ Corporate Solutions practice group, which is laser-focused on providing companies with consistent high-level execution of real estate transactions in every place they do business.
I am also part of the Society of Industrial and Office Realtors (SIOR), an organization made up of top-performing leaders in their respective markets. SIOR members collectively share best practices and creative solutions to handle the complexities industrial real estate clients will face. Through SIOR, I am able to constantly connect with top talent, which helps me uncover market intelligence and find local brokers in every market for my clients.
Lastly, my education spans from the study of economics at the University of California, Irvine, to obtaining my Master of Business Administration and my Master of Real Estate Development at the University of Southern California. These institutions, leaders in real estate education, taught me the three pillars of my practice: the inner workings of the economy, corporate functions, and real estate development.
WHAT THIS BOOK IS NOT
This book is not about being a landlord. Unlike most real estate books out there, it focuses entirely on the perspective of the tenant. If you only want to be an investor, this book is not for you, unless you are looking for insight into the challenges your customers are facing.
NEXT STEPS
Like any good book, you cannot dive headfirst into a nuanced discussion without some historical perspective. We will spend the first chapter going over the background of the industrial real estate market in North America and the three biggest trends shaping its future. You will not need to remember how many square feet of warehouse buildings are available or what the vacancy rate is in every city. Knowing how we reached this point in the market, however, will open your mind to different ways to think about your own projects.