{"id":420,"date":"2016-10-26T11:45:29","date_gmt":"2016-10-26T15:45:29","guid":{"rendered":"https:\/\/www.lee-associates.com\/pennsylvania-dev\/?p=420"},"modified":"2025-04-21T12:59:30","modified_gmt":"2025-04-21T16:59:30","slug":"the-industrial-yield-squeeze-is-on","status":"publish","type":"post","link":"https:\/\/www.lee-associates.com\/easternpa\/2016\/10\/26\/the-industrial-yield-squeeze-is-on\/","title":{"rendered":"The Industrial Yield Squeeze Is On"},"content":{"rendered":"<p>NEW YORK CITY\u2014Executives of Lee &amp; Associates recognize the need for regulations governing storm-water management and green area in general, but are quick to note the impact that these factors have on development yields.<\/p>\n<p><a href=\"https:\/\/www.lee-associates.com\/easternpa\/wp-content\/uploads\/sites\/83\/2016\/12\/Allan-Riorda.jpg\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/www.lee-associates.com\/easternpa\/wp-content\/uploads\/sites\/83\/2016\/12\/Allan-Riorda-300x181.jpg\" alt=\"allan-riorda\" width=\"300\" height=\"181\" class=\"alignnone size-medium wp-image-422\" srcset=\"https:\/\/www.lee-associates.com\/easternpa\/wp-content\/uploads\/sites\/83\/2016\/12\/Allan-Riorda-300x181.jpg 300w, https:\/\/www.lee-associates.com\/easternpa\/wp-content\/uploads\/sites\/83\/2016\/12\/Allan-Riorda-512x309.jpg 512w, https:\/\/www.lee-associates.com\/easternpa\/wp-content\/uploads\/sites\/83\/2016\/12\/Allan-Riorda.jpg 616w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a><br \/>\nRiorda: \u201cAs real estate experts, we need to be cognizant of the effect of regulations and related fees, and their collective impact on rental rates.\u201d<\/p>\n<p>NEW YORK CITY\u2014Outsiders to the industry may praise developers for their attention to environmental issues such as storm-water management. However, in many cases it\u2019s a consciousness born of necessity, as those initiatives are based in local, state and federal regulations falling under the auspices of the 1972 Clean Water Act and the EPA. One of the nation\u2019s critical areas in terms of storm-water management is the Chesapeake Bay Watershed, and Allan Riorda, president of Lee &amp; Associates\u2019 Chesapeake Region office, sees the regulations as a mixed blessing.<br \/>\n\u201cIn the early \u201980s the state of Maryland implemented a system designed primarily to reduce flooding and sediment that was pouring into Chesapeake Bay,\u201d says Riorda. \u201cThe bay had lost a substantial amount of natural grasses and other plants which, among other things, adversely affected the oyster beds.\u201d The state needed to clean that up to ensure a healthy bay. The good news is that \u201cthere\u2019s been significant improvement in the water quality,\u201d added Riorda.<\/p>\n<p>The bad news? \u201cWhen developers introduce required water-management systems into their site designs, it simultaneously adds cost and reduces the amount of land available to support rentable building area. It all filters down to rental rates,\u201d says Riorda. \u201cAs real estate experts, we need to be cognizant of the effect of regulations and related fees, and their collective impact on rental rates. One solution that has been implemented is using a regional storm-water management plan, which, according to Riorda, \u201cessentially creates one larger pond shared by several buildings.\u201d<\/p>\n<p><a href=\"https:\/\/www.lee-associates.com\/easternpa\/wp-content\/uploads\/sites\/83\/2016\/12\/John-Van-Buskirk.jpg\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/www.lee-associates.com\/easternpa\/wp-content\/uploads\/sites\/83\/2016\/12\/John-Van-Buskirk-300x181.jpg\" alt=\"john-van-buskirk\" width=\"300\" height=\"181\" class=\"alignnone size-medium wp-image-421\" srcset=\"https:\/\/www.lee-associates.com\/easternpa\/wp-content\/uploads\/sites\/83\/2016\/12\/John-Van-Buskirk-300x181.jpg 300w, https:\/\/www.lee-associates.com\/easternpa\/wp-content\/uploads\/sites\/83\/2016\/12\/John-Van-Buskirk-512x309.jpg 512w, https:\/\/www.lee-associates.com\/easternpa\/wp-content\/uploads\/sites\/83\/2016\/12\/John-Van-Buskirk.jpg 616w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a><br \/>\nVan Buskirk: \u201cAs e-commerce becomes a larger and larger part of the industrial landscape, the need for more parking\u2014especially cars\u2014will grow, given the high employee counts and multi-shift operations typical of fulfillment center operations.\u201d<br \/>\nJohn Van Buskirk, Riorda\u2019s counterpart in Eastern Pennsylvania, couldn\u2019t agree more. \u201cDevelopment projects need to meet the owner\u2019s expected return criteria, which are ultimately a reflection of market rates and their relationship to delivered costs.\u201d Unfortunately, storm-water management is only one of several challenges with which industrial developers are wrestling in their quest to deliver the next generation of sites.<\/p>\n<p>For example, Van Buskirk points out, \u201cas e-commerce becomes a larger and larger part of the industrial landscape, the need for more parking\u2014especially cars\u2014will grow, given the high employee counts and multi-shift operations typical of fulfillment center operations.\u201d<\/p>\n<p>None of which changes the need to provide \u201cfriendly yard areas with plenty of trailer parking, where drivers can come in, drop their loads, and quickly and efficiently go on with their day,\u201d says Van Buskirk, adding that \u201cthe heavy investment many occupiers are making in equipment and people has compounded the issue, inasmuch as they want to protect the ongoing viability of their operations with flexibility in the form of vertical and horizontal expansion opportunities.\u201d<\/p>\n<p>For the most part, the whittling-away of industrial yield hasn\u2019t been an overnight transformation. Rather, \u201cit\u2019s been a game of inches and feet fueled by incremental regulatory pressure and changing market dynamics,\u201d says Van Buskirk. \u201cA little bit here and a little bit there, and you wake up one day and say, \u2018Where are we, and how did we get here?\u2019\u201d<\/p>\n<p>Solutions? There really are none. \u201cIt\u2019s just another cost of doing business,\u201d Van Buskirk concludes.<\/p>\n<p>The industrial sector has become the hottest segment in commercial real estate. How will logistics companies keep up with the market forces of omnichannel commerce? When will new supply finally catch up with demand? Who\u2019s putting investment capital into industrial and what does the future hold? Join us at RealShare Industrial on November 16 and 17 for answers to these and other questions. Learn more.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>NEW YORK CITY\u2014Executives of Lee &amp; Associates recognize the need for regulations governing storm-water management and green area in general, but are quick to note the impact that these factors have on development yields. Riorda: \u201cAs real estate experts, we need to be cognizant of the effect of regulations and related fees, and their collective impact on rental rates.\u201d NEW YORK CITY\u2014Outsiders to the industry may praise developers for their attention to environmental issues such&#8230;<\/p>\n","protected":false},"author":24,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[19],"tags":[15,12,14,16,17,13],"class_list":["post-420","post","type-post","status-publish","format-standard","hentry","category-blog","tag-allan-riorda","tag-industrial","tag-john-van-buskirk","tag-lee-associates","tag-lee-associates-of-eastern-pennsylvania","tag-storm-water"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v28.7 (Yoast SEO v28.7) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>The Industrial Yield Squeeze Is On | Lee &amp; Associates<\/title>\n<meta name=\"description\" content=\"We recognize the general need to storm-water management and green areas, but those will impact development yields. 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