Work Style Reform Underway in Logistics Centers

There is an obvious shortage of workers in logistics centers. New development projects are taking place in the suburbs away from urban centers. A competition for human resources between logistics centers and suburban shopping malls is underway.

March 28, 2019

Logistics centers and commercial facilities are fighting over human resources

Commercial facilities such as stores and restaurants are operated with a focus on giving visitors a comfortable experience, and employees who work there can also enjoy the comfortable spaces. But what about logistics centers? Many did not even have air conditioning facilities, and their employees often had to work in an uncomfortable environment. In Japan, with low birth rates and an aging population, the country’s working population is steadily shrinking. Japan’s future rests on its ability to secure a workforce. The availability of a local workforce also plays a key role in how tenants select facilities to host their logistics centers. “Air conditioners are the minimum requirement,” says Hajimu Taguchi of the JLL Markets Department, an expert in leasing logistics centers. “Aside from that, the main workforce is usually in large part made up of local moms who are juggling work with looking after the kids and managing the household. So, in order to attract these women, some properties have childcare facilities where they can leave their children while they are at work.” In order to improve convenience for employees, logistics centers with convenience stores and restaurants on their rooftop are also on the rise. Skechers Japan G.K.’s new logistics center, whose relocation and expansion project was supported by the JLL Markets Department, has a stylish cafe lounge and a see-through elevator—the kind of comfortable interior usually seen in a commercial facility.

Logistics centers need to secure labor force

Traditionally, warehouses have mainly been used for product storage, even in metropolitan areas, and have not required much labor force. In recent years, however, more and more have started to serve as distribution and processing centers, as well. This shift in roles has compelled them to hire more workers, including part-time employees. Furthermore, as more tenants demand larger floor areas, the facilities themselves became larger in many cases. For example, the multi-tenant logistics center DPL Nagareyama, developed by Daiwa House Industry, has a total floor area of roughly 387,000 m2 (a total of the facility’s three buildings). The scale of this development is as large as that of developing a whole town, and the facility needs to provide support to the workers there in their daily lives. MELP Funabashi, developed by Mitsui Fudosan, is going to have a multipurpose building—the first of its kind—with cafeterias and a day-care center. The project presents a vision of facility development that is open to its neighboring community.

Making work more comfortable with fully equipped common spaces

Providing a comfortable working environment for tenants in logistics centers can help these facilities stand out from their competitors. “I suppose that’s because providing a comfortable workplace not only means that facility owners have an advantage when it comes to leasing the property to tenants, but also contributes greatly to their rental income,” says Ken Tomoda of the JLL Markets Department. Average rent in the logistics center market in the metropolitan area is estimated to be 4,000 yen —give or take— per tsubo per month. (A tsubo is a unit of area approximately 3.3 square meters.) This rate is not affected much by economic trends. However, because the areas being rented are very large, an increase in the monthly rent of even 100 yen per tsubo can substantially boost annual profitability. “It is mainly investors that are developing logistic centers now,” notes Tomoda. The development of logistics centers that can meet the occupancy rate and profitability that investors seek could be one reason for the evolution in logistics-related properties.

It is expected that there will continue to be a steady demand itself for logistics centers thanks to the continuing growth of e-commerce, but occupancy rates remain low in some facilities. In the future, as the supply of new logistics centers grows, the quickest way to fill vacancies early on will be to develop facilities that make working comfortable from the viewpoint of workers.