REAL ESTATE NEWS

Warehouse automation projects today can be highly sophisticated, combining robotics, conveyors, automated storage and retrieval systems (AS/RS), sensors, IoT devices and AI-driven analytics to optimize workflows, to monitor inventory and improve efficiency.

While these systems promise faster fulfillment, higher accuracy and reduced labor costs, projects often run into budget and timeline challenges, not because the technology is unpredictable, but because the supporting building infrastructure is frequently overlooked, according to a Prologis report.

Most warehouses were originally designed for people and forklifts, not autonomous equipment. Automation introduces tighter floor tolerances, higher power density, updated fire life safety requirements and mission-critical network reliability. When these facility requirements are not addressed early, necessary upgrades surface under compressed timelines, raising costs and complicating schedules.

Automation feasibility starts with analyzing operational data, including SKU profiles, order volumes, peak variability and labor structures. However, a complete feasibility assessment must also consider the warehouse itself, said Prologis.

Key building factors include clear height and structural capacity, floor flatness and load tolerance, electrical capacity and distribution, fire life safety systems and insurance requirements, network infrastructure and redundancy and local permitting or code constraints. Evaluating both operations and facility requirements early helps prevent unplanned scope gaps and unexpected cost increases later in the project.

Most automated warehouse systems consist of several components: material handling equipment (conveyors, ASRS or autonomous mobile robots), control systems and programmable logic controllers, warehouse management and control software, sensors and safety systems, as well as power and network infrastructure. While the first four groups are typically provided by the automation vendor, the fifth — along with necessary structural, electrical and fire protection upgrades — often falls outside the system contract.

Suppliers generally limit project scope to the systems they design, build and control, leaving facility-related work — which can vary based on building condition, regional codes, utility availability and insurer requirements — outside the initial scope. Prologis calls this scenario the "exclusion gap," which often emerges late in the process, after budget approval and key decisions have been made.

Automation business cases often focus on the system investment as the Year 0 capital outlay. However, facility upgrades can add 10% to 15% to that initial investment. According to Prologis, these costs can significantly affect payback periods, internal rates of return and capital planning assumptions.

Automation ROI does not erode because systems are overpriced; rather, it erodes when responsibility for building readiness is fragmented and uncoordinated, said Prologis.

Source: GlobeSt/ALM