Before the Internet started dominating almost every aspect of daily life, industrial construction was a very different industry. Industrial construction involves the development and building of warehouses, manufacturing facilities, and any type of commercial property that does not involve a majority of office space.
Industrial development used to be conducted in remote areas and near shipping ports, but the shift in retail sales and changes in the methods of energy production in the United States has caused a change in the way industrial construction is done.
What Is Industrial Construction?
The best way to understand the definition of industrial construction is to expand on the explanation given earlier. Specifically, industrial construction is typified by the design, construction, and upgrading of mechanical components within a specific facility. For example, the inner workings of a paint manufacturing facility would be specialized niches of industrial construction. The development and installation of the tanks along with the pipework that runs materials to and from those tanks are parts of industrial construction.
Industrial construction also encompasses the development of space to be used for industrial purposes. Warehouses are the simplest form of industrial construction, but they also contain some of the most advanced technology in the industrial arena. As a comparison, an office complex or condominium may look industrial, but they lack the specialized mechanical elements to be considered industrial.
Increased Need For Materials Creates This Type Of Construction
Pipelines and alternative energy have been in the news headlines for some time, and they are more than just passing energy trends. Collecting and processing energy such as refining oil into gasoline or storing solar and wind energy is creating jobs all over the country. For example, New Orleans is seeing a boost in industrial construction because of all of the focus on alternative energy and helping the United States to be energy self-sufficient.
The newest pipelines being built are ending in New Orleans where the oil is refined and shipped to other parts of the country. Due to its year-round exposure to wind and sunlight, New Orleans is also seeing a boost in alternative energy construction as well. All of this industrial construction creates jobs in the short and long-term for the entire area.
Throughout the country, the need to store and distribute alternative energy is creating a flurry of industrial construction projects. These projects are meant to create structures that bridge the gap between where the energy is being collected, and the population centers where it is needed. As the country continues to look beyond coal and wood burning as energy sources, this type of industrial construction is expected to increase.
How E-commerce Is Changing How Construction Is Done
In the years before the Internet, retail sales were dominated by malls. In many cases, the bigger malls were built away from centralized population areas, and that caused suburbs to rise up around those malls. Industrial construction was so focused on malls that, at its peak, the number of small shopping centers and malls in the United States reached 109,500.
For industrial developers, malls made life easy because residential development would follow malls and buy up the land in the surrounding areas. But now it is estimated that nearly 33 percent of all shopping malls will close their doors for good in the coming years, and that will completely alter the industrial construction landscape in the United States.
What is happening to the American mall? The simple answer is that retail sales are shifting from malls to e-commerce websites. Customers are more interested in shopping from home on their own terms, as opposed to having to drive to a mall to get what they want. When nearly 35,000 industrial facilities close in such a short period of time, the end result is a significant shift in the way industrial construction is done.
More Warehouses Are Being Built To Stock Supplies For Web Customers
With the rise of e-commerce websites, the focus for industrial construction has shifted from supplying malls with products, to supplying consumers directly. There has been a new rise in investment in industrial real estate that is showing up in places that industrial sites used to avoid. Developers are seeing a higher return on investment in industrial properties than any other real estate segment, and these properties are moving closer to population centers.
The new wave of retails sales online requires fast delivery to customers all over the country. It took a while for e-commerce websites to realize it, but they have shattered the notion that central warehousing is the most cost-effective way to reach customers. Instead of putting large warehouses close to shipping ports to make it easier to get products to the warehouses, new industrial construction is putting smaller warehouses closer to the population centers to speed up shipping.
Online retailers such as Amazon are investing in building a series of smaller distribution centers that are filled with state-of-the-art inventory monitoring equipment, and stock that changes on a regular basis. The software determines which products are most popular among customers closest to a distribution center, and that is the product that is primarily stored in those centers, awaiting shipment.
Creating Shorter Timelines
The Internet has compressed the timetable that retail companies are used to, and that means that the urgency to develop all of this new industrial land is strong. New distribution centers are going up quickly, and many of the larger retailers are getting away from the idea of outsourcing their warehousing and investing in warehouses of their own.
Building industrial centers closer to population areas also gives retailers the opportunity to experiment with different shipping methods. Larger retailers with a growing number of warehouses are offering the option for customers to pick up their products, and companies such as Amazon are experimenting with same-day delivery by using drones.
Associate Construction Is Also Picking Up
The increase in industrial construction close to population centers is also causing an increase in road construction, utility construction, and industrial supply facilities construction. Fuel supply companies and other industries that support industrial organizations are also seeing a rise in construction activity.
The increase in alternative energy development is also going hand-in-hand with the new warehouse construction throughout the country. All of this is helping to cause a boost in industrial construction that has not been seen in a long time. Energy companies are also causing an increase in the need for associated industries such as trucking and rail transportation.
Industrial construction is the process of building the infrastructure that business needs to run. As the retail sales industry shifts away from centralized warehousing to moving distribution centers closer to their customers, this will cause a significant boost in industrial construction. Alternative energy growth and the expansion of domestic oil transportation and refining is also causing significant increases in industrial construction around the country.
There are short and long-term benefits to industrial construction that include temporary construction jobs, and long-term jobs working at the facilities when they are completed. While this significant shift in the industrial needs of the retail industry was not something many people predicted, those who work in the industrial construction industry are definitely glad to see that industrial real estate development is once again a very popular part of the American business culture.