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The logistics warehouses have undergone major transformations over the years, together with the technological development and the increase in the number of residents; Professionalization in the field is a warning sign for new entrepreneurs
By Yair Levy
The field of logistics real estate, a sub-branch within business real estate, is almost unknown to those who do not deal with it directly. Logistic real estate – those buildings used to store and distribute goods and products – is a niche field, and those involved in it on the entrepreneurial side are a small group of companies that have developed great proficiency and specific expertise in the subject. The field that began to develop in Israel in the 1960s is currently at a crossroads and opinions are divided regarding its future development. From 5 to 14 meters high The logistics real estate industry has undergone many changes in its 50 years of activity. At the beginning, in the 1960s, warehouses were established for importers who brought goods to Israel. Most of the warehouses operated until the end of the 1980s were set up in converted industrial areas, and were very basic: ceilings at a height of 5-6 meters, wide entrance doors and loading carried out from the warehouse floor to the truck by forklift. Manufacturers or importers, who engaged in marketing and distribution, set up warehouses in major cities, and moved goods from the port or the production floor to the various warehouses they owned throughout the country. In the 1990s, the market began to change, partly due to the waves of immigration to Israel (and the increase in the standard of living) that expanded the scope of the population and the demand for various products. Companies began to improve and optimize work methods, which was also made possible thanks to technological development. The method of loading on trucks, for example, was replaced by loading from the back and required the introduction of ramps into the warehouse. Using tower forklifts allowed storage on shelves instead of pallet on pallet. The management of the warehouses with partial automation also made storage at height possible. At the same time, the companies realized that the meaning of storage at height, while reducing the area of the warehouse floor, would also be a significant saving in rent and property taxes. This conclusion required the companies to build new warehouses: ceilings of 8-9 meters replaced the standard ceilings. The developers have expanded to allow the installation of shelves and convenient forklift movement. The companies realized that it is not possible to look at storage, distribution and transportation as three separate factors – but as a chain in which each link directly affects the other and requires a different type of infrastructure. Logistics became a specialty, and the subject gained further momentum with the establishment of new logistics companies that provided storage and transportation services to importers and outsourced small and medium-sized companies. Of course, the expansion of the roads, especially Highway 6, allowed the storage companies to reduce the number of warehouses and concentrate their activities in one warehouse in the center (to which two more small warehouses were added, in Haifa and Be’er Sheva) and even opened up the possibility for them to establish distribution centers in areas such as Kiryat- Gat, Gedera, Beer Tobiah and the like. At the same time, our consumption habits and the transition to online shopping have contributed to the accelerated development of the logistics industry. Importers have started transferring all handling of the goods from the port to the customer’s home or the point of sale to the logistics companies. Gradually, additional changes were made to the new warehouse buildings: the ceiling height rose to 12-14 meters and more precise construction was required on the warehouse floor to allow the turret forklifts to work at height. Following the demand for logistics areas, new “players” entered the industry. Already in the early 2000s, many “discovered” the field of logistics real estate, and the field became attractive for private entrepreneurs who began to build warehouses on land they owned in the center of the country, near traffic routes. The era of automatic warehouses And today, we are at the dawn of the era of automated warehouses. Warehouses operated by robots at heights of 25-30 meters instead of forklifts. These warehouses must be specifically adapted to the storage and inventory management requirements of the company, a requirement that strategically dictates a different planning. Today, MRL planning is done from the inside Pressed, that is, first of all the automatic storage which is precisely adapted to the company’s products and its needs, and only then the outer shell. A specific technological adaptation to the types of stored goods is required, which drastically increases the investment costs. In Israel, as in the rest of the world, the trend is to outsource the storage activity and the transfer outside the core of the company’s activity, and to transfer the activity to dedicated companies specializing in the subject. The food sector was and remains the exception. Companies such as Osem, Strauss Elite, Tnuva, the Central Beverage Company and the like continue to build and operate new and sophisticated marlogs of their own. While marketing chains such as Fersel and Mega Marlogs are treated as profit centers, and the manufacturers of food and consumer products are required to direct goods to Marlog (while offsetting the distribution fee to the branches) and from there the distribution is done to the chain stores. When you add to this the increase in land and construction prices, the question arises as to whether the logistics real estate sector is still a viable investment avenue for entrepreneurs. It seems that in the available data, entrepreneurs have no real economic justification to operate in the industry. The rising cost of land, the technological development and the large supply harm the attractiveness of the investment and push it back into the hands of the specialized companies, away from the eyes of the entrepreneurs. The high construction costs and the demand for perfect adaptation to the customer’s needs make the investment in an automated warehouse dangerous, except in cases where there is an advance order from a specific customer, in a lease agreement for at least 25 years, without an exit station. However, there is still a demand for warehouses that are not automated in the center of the country, despite the fact that rental prices have reached a peak that does not allow for the profitable operation of a warehouse. Rental prices of 42-37 NIS per square meter plus management fees and property taxes constitute a barrier to development in the center, and it is estimated that in this area too a decrease in demand and a shift to distant places along Highway 6 is expected. The global trend of transferring the entire field of logistics to specialized companies is expected to continue in Israel, and will It will be interesting to see if food production and distribution companies will also join this trend. img class=”alignnone size-medium wp-image-974″ src=”https://www.yairlevy.com/wp-content/uploads/2014/12/table-rents-December-2014-300×279.jpg” alt =”Rent table December 2014″ width=”331″ height=”308″ />[:]
