Feature

Industrial on The Rise: Q+A with Founding Partner Paul Kristedja

Feb 25, 2022

Kristy Eudy

Since the coronavirus pandemic took hold two years ago, the increased need for logistics and warehouse space quickly escalated and fast-tracked the industry to what seems an unstoppable trajectory of growth. To gain some further insight on the significant changes taking place, we talked with Paul Kristedja, Founding Partner and Chief Operating Officer, on how KPRS is staying at the forefront of this rapidly moving market.

You’ve overseen industrial projects of all sizes for the past 30 years, can you share from your perspective some of the major changes have you observed in the industrial sector this last year?

Since its onset, we’ve all seen how the pandemic has had far-reaching effects that have spread to all major markets. At KPRS we’ve been very fortunate as an essential service to keep building for our clients. Despite all the challenges we’ve faced, each of the markets we serve have continued to grow, and our industrial sector is no exception. Commerce activity across the country has skyrocketed due to the ease and safety of shopping from home. Even with the economy reopening, the convenience of online retail is here to stay. This in turn has created a staggering demand for logistics center construction throughout major cities and beyond.

On the other side of this demand, we’re also seeing a delay in material shipping and lead times, which is currently a global issue. Despite all of this, we’ve been able to effectively work together with our clients to provide alternatives that best fit the needs of any project. Our preconstruction group regularly obtains updates from material suppliers, and we talk daily to our subcontractor partners. We've gained a wide perspective on market behavior and we’re able to notify our clients of further changes we can anticipate.

What shifts were you seeing in industrial even before the impact of the coronavirus?

We started to see just the beginning of our reliance on logistics centers with the growth of online retail in the past several years. We were already starting to run out of room in the most populated areas of Southern California. Now the pandemic has sent that need into overdrive as shopping online has become our way of life. A secondary market was also just beginning to emerge and now with limited space, there’s been a rise in demand for shared warehouse uses. We expect to see further innovations on this end, particularly as ghost kitchens are becoming even more popular.

How do you best explain the demand and growth in NorCal?

Much of Southern California’s industrial growth has carried over to the NorCal region, as there is space and land available for expansion. The bottom line is, we’re running out of room in SoCal. To cover for this, many e-commerce companies are moving into multilevel warehousing in tighter urban areas. Especially since the distributor wants to be closer to the consumer, allowing for faster last-mile delivery. We’ll continue to see the cross-docking concept emerge, which is structured for trucks to gather goods at multiple levels without the need for long-term storage, as goods are moved more quickly.

Considering all of this, how has KPRS adjusted its focus?

Our industrial group expanded to NorCal over five years ago, and we’ve known since that time that space is limited in the SoCal region. Our team is now well-established in that area as we’ve constructed millions of square feet for an array of clients. Considering current cost increases, our estimating group stays ahead of these figures so that our clients are not surprised. We’re focused on thorough research and staying on top of market shifts for our clients.

How has robotics and automation shifted the industrial sector and adjusted?

Amazon has really set the standard with the use of robotics and automation in their facilities in both management of containers and efficient distribution. Geospatial and GPS technologies are used for the intricate racking systems, and now buildings are constructed with more height to allow for a higher inventory of racking. In terms of robotics and automation in the construction of the building, what we’re seeing with 3D printing of prefab structures in the residential sector will eventually become the way we construct for the industrial market as well.

How would you describe the difference of building an industrial facility today vs 10 or even 20 years ago?

Today, the process is much more technical. There are significant advances in slab design, from specialized concrete technology to new joint control details and specific mix designs, while different types of slab-reinforcing technology offers the end-user a much better slab in terms of flatness, shrinkage control, curling and hardness. In addition, today’s end-users have extremely tight time-frames. So, today’s construction team must be creative in their approach to achieve the tight schedules.

What changes have you seen with developer clients?

In some ways, it’s more challenging to be a developer today than it was 30 years ago. In large part, this is due to the entitlements process changing. There are several reasons for this including environmental and water conservation requirements in California. Installation of storm drains is a considerable factor. Depending on the square footage, most industrial projects now need self-contained roof draining systems on large buildings, and a percentage of the site is required to collect precipitation to prevent it from seeping into groundwater. Another consideration is the fire protection; where the system must be installed on a loop in SoCal, all NorCal projects are required to have a two-loop system. These requirements and changes are noteworthy factors for our developer clients and their projects. Clients are now more sophisticated and savvier; they expect the general contractor to be proactive and knowledgeable in all aspects of the project. Clients today look to the general contractor to help control costs and over-design.

How do we ensure we have the right subs who can deliver?

We really value our subcontractor partners and work to build solid relationships with them. We lean on using subs that have performed for us previously since we have proven who these folks are. We always want to use local companies. When we break into a new market, we always go out to meet and recruit new subs face-to-face, and I even personally do this. Word of mouth recommendations are so important to find the right people for the job and building relationships in this way is vital for us.