July 23, 2025 | BOMA International, Ella Krygiel
The Fourth Industrial Revolution is leading the way in how we process and manage AI in our warehouses and manufacturing spaces. As AI and robotics each require their own integration strategies, leaders must figure out how the industrial real estate industry can adapt to these technologies and incorporate them into their business plans. Damon Juha, Partner and Vice Chair of Real Estate Practice, Saul Ewing; Bill Lussow, SIOR, SIOR Chicago Chapter Vice President, Principal Bespoke Commercial Real Estate; Mario Ochoa, Managing Director, Industrial Leasing, JLL and Brewster Smith, Senior Vice President, Supply Chain Solutions, Colliers share their insights on how AI and automation are influencing the sector and what occupiers need to consider moving forward.
AI and Automation as Design Catalysts
AI is transforming the functionality of industrial properties—impacting everything from its power needs to layout and location strategy. All four of our experts, Juha, Ochoa, Lussow and Smith, agree that power is a critical element to any warehouse or industrial space. As Juha describes, “Power is key for many of our occupier clients and those developing for them.” Lussow elaborates: “Newer facilities are being designed with greater electrical capacity, preferred to have dedicated redundant power, higher voltage service and cleaner power to support robotics, machine vision and server-heavy operations.” Smith agrees, remarking that complex machines and automated solutions require significant electric power to operate efficiently and safely. For perspective, Data Center Knowledge reports that large or hyperscale data centers consume 20 MW to over 100 MW of power—a figure that will likely increase as technology advances.
Beyond power, layout changes are equally essential. Ochoa highlights how AI integration on the shop floor is leading to “densification in the factories, providing substantial productivity gains.” In other words, robotics are being packed more efficiently, even alongside employees. Collaborative robots (or cobots) can accelerate tasks like soldering, improving both speed and precision. To accommodate AGVs (automated guided vehicles) and robotic arms, Lussow stresses the importance of considering clear heights, floor flatness tolerances, column spacing and ceiling obstructions in facility design. Smith adds that “optimized aisle widths” and specialized zones for tasks like robotic picking are other critical layout changes.
When it comes to site selection AI and automation facilities, Lussow points to the growing importance of fiber connectivity, technical labor pools and reliable utilities. On the other hand, Smith takes a more cautious stance, suggesting that while automation optimizes space and efficiency, site selection criteria are unlikely to change drastically. On a related note, Juha shares that he’s seen “companies being cognizant of the fact that fewer humans are in very large buildings, prompting them to create break rooms with greater amenities than we’ve historically seen.” NAIOP echoes this sentiment, indicating that access to a skilled labor pool remains essential for project success, and that collaboration between companies, educational institutions and workforce training programs can help meet industrial demands.
The New Occupier Standard
With the changes outlined above, occupiers’ expectations are shifting as AI and automation become increasingly integrated into daily industrial operations. For example, Juha highlights the demand for efficiency: “Occupiers expect to be able to run a seamless 24/7 operation without any interruptions, and with ever increasing efficiencies as AI identifies patterns and issues.” Ochoa expands on this by explaining that occupiers must carefully assess whether their existing factories are equipped to integrate automation, robotics and AI. “Implementing these technologies calls for deeper facility integration with the operations to provide better environmental conditions and control, more flexibility in deploying utilities and minimizing the downtime for maintenance,” he says.
Globe Trade Magazine adds that executives wanting to automate their material flow in an existing warehouse should “test multiple possibles” first and points out that understanding how robots will navigate the space can take time. Their articles also discuss that, “If items move in predictable ways through warehouses — such as by passing through specific stations — robots may be able to assist humans with their tasks at each stage.”
As occupiers consider the readiness of their facilities, it’s clear that their expectations are evolving, particularly when it comes to automation upgrades. Lussow mentions that traditional concerns like dock count and trailer parking are replaced by new questions, such as:
- “Can this building handle a redundant fiber loop?”
- “Is there enough data cooling capacity built in?”
This shift reinforces the increasing demand for flexibility in industrial design. Lussow observes that occupiers are increasingly leaning toward “purpose-built or retrofitted smart facilities.” Smith takes this further, explaining that AI and machine learning are pushing the boundaries of warehouse automation. “The advent of AI and machine learning may accelerate the capabilities of this solution, pushing it to do more complicated tasks such as packing and trailer loading with limited human intervention,” he states.
The Hidden Challenges of AI and Robotics
One often-overlooked issue in AI integration is the physical setup of manufacturing spaces. As Ochoa says, “The most common mistake is assuming that any location is ready to handle all these technologies. In many cases, old buildings cannot be retrofitted if their core specifications are not conducive to implementing the solution (column spacing, clear heights, fire suppression, power capacity), or if the infrastructure deployment will be more expensive than relocating to another place.” Lussow agrees: “Many facilities weren’t built to support AI or robotics; this is becoming a complicated landscape on how to modify existing structures to support the tech endeavors of the modern-day supply chain.” Juha adds that he’s seen entire systems fail due to floor deviations too great for robotics to function properly, leading to substantial setbacks.
In addition to infrastructure, Juha emphasizes another critical challenge: a lack of skilled personnel who can troubleshoot AI/robotics systems when issues arise. “To avoid downtime,” he explains, “it is imperative to have multiple people trained up on the technology.” Beyond the need for training and infrastructure, Smith points out that the biggest challenge in adopting automation into warehouse operations lies in software integration:
“An occupier’s warehouse management system (WMS) requires a middle layer of software, the warehouse execution system (WES), which acts as a translator between the WMS and automation technologies like robotic arms and automated storage systems. The integration of these systems is often the most challenging aspect of implementation.”
Despite these hurdles, the overarching theme from our experts is a call for reassessing priorities. By refining a facility’s design, layout and location to better align with the growth of AI, automation and robotics, occupiers can take proactive steps in shaping their future business strategies. Rather than dwelling on what-ifs, executives can focus on experimenting with technologies like cobots or AGVs now. This proactive approach will position them for the inevitable, tech-driven Fourth Industrial Revolution.
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