Industrial Insights
The brief on how industrial real estate actually gets decided.
Issue No. 1 · June 2026 · Justin Smith, Lee & Associates
▶Listen to this on the Industrial Insights podcast
Headlines
Power has quietly become the long pole in industrial siting
For heavy users, the gating question on a building is no longer asking rate or clear height — it's how many amps the utility can actually deliver, and when. Interconnection queues now decide where automation, cold storage, and manufacturing can physically land. The occupiers who win treat the utility as the first call, not the last.
↳ sources added per issue — CoStar · NAIOP · your Q1 2026 market reports
The "expand vs. relocate" math is back on the table
With rent growth off its peak but fit-out and power-upgrade costs climbing, more occupiers are re-running the stay/expand/move decision instead of defaulting to a move. The switching cost — not the rent delta — is doing the deciding.
↳ sources added per issue — CBRE · JLL Research
— — —
Main Story
The Three Doors
Every growing company eventually hits the same wall — we don't fit here anymore — and almost everyone reduces what comes next to a binary: stay or go. That framing quietly costs them the best option on the board. This week, two companies I'm working with are standing in front of the same decision and walking through different doors. Why they're choosing differently is the most useful thing I can teach you about site selection.
Most companies only see two doors
There are actually three
Stay, expand-in-place, or move — and #2 is the one everyone forgets.
Stay means renew and optimize what you have. Move means relocate to a market built for the next decade. The middle door — expand around where you already are, into the building next door or a campus — gets skipped because "we need more space" pattern-matches to "we need a new place." That reflex is often wrong, and it's expensive.
Door #2: the manufacturer staying put
They could have gone anywhere. One number kept them home.
This one needs to roughly double — 100,000 SF now, 200,000+ later. On paper they could go anywhere. In reality every option ran into a single question: how far is it from the people who already work here? The workforce is skilled and hard to replace — move them 40 minutes and you don't relocate a workforce, you re-hire one. So the search inverted, from "best building" to "best building within a real commute of our front door." Of 414 buildings that fit the geography, 77 met spec on paper and only about seven were also close enough to keep the team intact. Their answer is door #2: build a campus around the plant they already run.
Door #3: the operator weighing a move
When the labor-and-freight gap gets wide enough, staying becomes the expensive option.
A second company — a high-volume fulfillment operation — is leaning the other way, for an equally good reason. Their costs are dominated by labor and outbound freight, and the gap between their current market and the alternatives keeps widening. So we built a five-market model off twelve months of their real shipping and headcount data — not vibes — to test whether a move pays for itself after you subtract the cost of making it. A move only makes sense when the savings clear that switching cost.
You don't pick a door — you score it
Two companies, opposite answers — because each weighted the same three costs differently.
That's the real work: not "which building," but how each door scores on the three levers that drive an operation's economics — real estate, transportation, and labor. Here's how to read them.
01 · Real Estate
The rent is the cheapest line on the page.
What decides it isn't the asking rate — it's the invisible specs (power, gas, water) that quietly disqualify most buildings before square footage ever comes up, and how much building you actually need. One operator I trust, Adrian Betts, has 6×'d a warehouse's throughput inside the same four walls. Before you move for space, make sure you really need it.
02 · Transportation
For a shipper, freight can dwarf the rent.
Where your customers, lanes, and ports sit usually matters more than the building itself. Outbound freight is often the largest controllable cost in the P&L — drift 50 miles the wrong way and you can erase every dollar you saved on rent. It's the leg quietly pushing that fulfillment operator toward a move.
03 · Labor
Available, affordable, retainable — then budget the ramp.
It's not just "is there labor." It's the wage you'll actually pay, whether you can keep people once you've got them, and the ramp nobody budgets — the months and dollars to hire, onboard, and train a new crew without dropping service. It's why a $3M estimate can feel like a fantasy and $8–9M feels real. I went deep on the labor ramp with Adrian Betts of Xpandur on the podcast:
"One warehouse, two tenants, a wall down the middle. I pay $12 an hour, you pay $19 — where do the applicants go? Justin's side." Adrian Betts, Xpandur
▶ Listen: the labor ramp on Industrial Insights →
Before you pick a door
Five questions to run before you fall for a building.
Real estate — can the building deliver your real power, gas, and water loads today, and do you need as much space as you think?
Transportation — where do your customers and lanes actually sit, and what does the freight math say?
Labor — is the workforce there, affordable, and retainable — and have you budgeted the ramp, not just the move?
Switching cost — counted in lost people and downtime, what does leaving really cost?
The flip test — what one number (a wage, a freight lane, a power-upgrade quote) would change your answer?
Get those right and the building nearly picks itself. Door #2 deserves a real look before you write off your current market — sometimes the best move is barely a move at all.
— Justin
This is the decision I help companies pressure-test — across all three legs, not just the real estate. Standing in front of one of these doors? Just reply.