12/17/2020 | by Sarah Borchersen-Keto

The increased adoption of automation technology within logistics real estate will help ease the shift toward more resilient, just-in-case supply chains, according to Melinda McLaughlin, vice president and global head of research at Prologis, Inc. (NYSE: PLD).

Speaking on the REIT Report, McLaughlin said the shift in supply chain format will put an intense strain on the amount of available supply of property. “Automation can help customers adapt to that and incorporate that move to more resilient supply chains, without necessarily being limited by the amount of labor or logistics real estate out in the market,” she said.

McLaughlin noted that the level of automation adoption in logistics real estate is increasing but is lower than most people think. Only about 20% of warehouse facilities incorporate more advanced types of automation, and that’s highly concentrated toward e-commerce facilities due to their labor intensity, she said.

Mary McLaughlin on the REIT Report Podcast

Automation adoption has shifted to technology that is more modular, more mobile, and with financing that is also more flexible, according to McLaughlin.

Increased automation makes the existing workforce more productive, meaning companies are less dependent upon an ample supply of labor, McLaughlin said. “Automation does not completely replace labor, but it does open up some location choice so you can make the best decision to get to the level of service and cost optimization throughout the supply chain that you want,” she noted.

By freeing up location choice, more customers can move into urban areas where labor is more expensive, McLaughlin said. An additional benefit of increased automation, she pointed out, is improved workplace safety.