In Steven Spielberg’s 2001 science fiction movie A.I. Artificial Intelligence, the world saw the creation of advanced humanoids that were almost indistinguishable from humans. While we have not progressed that far in real life, today machines with A.I. capabilities run autonomously, learn and adapt, collect and analyse data, communicate and propose decisions. These machines are increasingly being adopted as part of the supply chain process. Examples include automated storage and retrieval systems (ASRS), driverless forklifts and drones.

There is no doubt that as Industry 4.0 (the creation of cyber physical systems that are formed by the coming together of automation and computers) transforms the way storage and logistics functions are being set-up, this will have an impact on the brick-and-mortar, and landlords need to consider the implications on their assets as they review their portfolio.  Below are two options for consideration as landlords gear up their facilities for Industry 4.0.

1.  Upgrade Existing Building Specifications

Smart facilities with machines and cyber connected systems will require higher building specifications such as higher floor-loading capacity, higher electrical loading and fibre optic infrastructure.

While changes to the physical shell are limited unless landlords rebuild, upgrading the power supply and making buildings fibre-ready are quick and easy fixes that existing landlords can undertake to enhance the specifications of their existing warehouses.

2.  Tear Down and Rebuild

For landlords redeveloping their warehouses, there is merit in designing a versatile facility that can be modified in the future. Incorporating modular mechanical and electrical (M&E) systems for instance, will allow for future expansion due to the adoption of Industry 4.0 initiatives by occupiers. Examples include spare risers to run M&E cables, expansion provision in the electrical room to accommodate future increase in power requirements and having designated areas for additional water tanks and air-conditioning compressors.

The new building can also be constructed with a floor-loading capacity that is above the current requirement, to allow for the flexibility to add more floors (if the gross floor area has not been maximised) when needed.

For those with built-to-lease arrangements for a specific tenant looking to adopt advanced automation systems like ASRS into their warehouse operations, it is advisable that an experienced logistics solutions provider be appointed upfront so that requirements like the floor-to-ceiling height for the ASRS can be incorporated into the building design.

Landlords can also take advantage of the Green Mark Gross Floor Area Incentive Scheme which aims to encourage the development of buildings with higher tier Green Mark ratings (i.e. Green Mark Platinum or Green Mark GoldPlus). The incorporation of green features in the warehouse design such as energy efficient LED lighting, efficient air-conditioning systems and installing solar panels will translate into energy and water savings that can offset some of the building operating costs arising from the implementation of Industry 4.0 initiatives (e.g. higher power usage).

Examples of Green Warehouses in Singapore
*Envelope Thermal Transfer Value
Source: Building and Construction Authority, JLL Research, August 2018

While Steven Spielberg’s advanced humanoids will remain science fiction in reel life for now, the fourth industrial revolution is real and will continue to transform the logistics landscape. Landlords should pro-actively evaluate the suitability of their existing facilities and upgrade or rebuild where necessary to cater to the digital economy so as to stay in or ahead of the competition.

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