From offshore wind to online shopping, demand for industrial construction grows

From a burgeoning offshore wind energy industry to ongoing growth of e-commerce to the onset of major infrastructure projects, the industrial construction sector is poised to support significant activity in 2021.

Thought leaders from several industries discussed the factors that will drive construction in Maryland during “The Industrial Market Construction Forecast” webinar, part of BC&E’s Construction Blueprint Series.

OFFSHORE WIND

Establishing the first offshore wind farms along the East Coast constitutes “large-scale infrastructure projects that involve quite a bit of development onshore in terms of facilities to build, operate and maintain windfarms as well as landfall and interconnection facilities to bring power ashore,” said Brady Walker, Mid-Atlantic Market Manager for Ørsted. “With a large portfolio of projects – eight up and down the East Coast – Ørsted obviously will make an impact in the region.”

The developer is creating a $13 million, 45-acre offshore wind staging center at Tradepoint Atlantic to serve the Skipjack Windfarm near Ocean City. Ørsted has “committed to spending about 34 percent of the project’s total CapEx in the state. That’s about $210 million,” Walker said. That will create “about 900 construction jobs to support the buildout of our facilities both in Baltimore and other parts of the state as well as critical components of the windfarm.”

In addition, Ørsted’s other projects along the East Coast create contracting opportunities for Maryland companies which can be tracked at https://www.orstedprocurement.com/web/login.html. Furthermore, state mandates to source larger amounts of clean energy are expected to trigger additional offshore wind developments. To meet those mandates, “Maryland has 1,200 megawatts left to procure, New York and New Jersey 9.5 gigawatts and 7.5 gigawatts respectively so there is a lot more work on the horizon,” Walker said.

INFRASTRUCTURE PROJECTS

Two major infrastructure projects serving Baltimore’s industrial sector are about to begin. Construction on the $440 million Howard Street Tunnel project is slated to begin in late 2021, said Dominic Scurti, Deputy Director of Planning at the Maryland Port Administration. To accommodate double-stacked shipping containers on trains, CSX along with federal and state agencies will expand the rail tunnel beneath Baltimore and increase clearance heights on 22 bridges in Maryland, Delaware and Pennsylvania. The project is expected to create 6,000 construction jobs.

Meanwhile, the Maryland Port Administration plans to begin work on the first, $10 million phase of a $36.7 million project to improve stormwater management and resiliency around the Dundalk Marine Terminal by installing a sea curb, tidal gates and box culverts.

“In the last 100 years, the sea level has risen a little over a foot in Baltimore Harbor,” Scurti said. “It could rise two-plus feet in the coming years. Couple that with a storm surge and the risk of the Patapsco River flowing onto Dundalk terminal and creating cargo loss increases greatly over the next few years.”

E-COMMERCE GROWTH

The thriving e-commerce sector continues to grow, creating demand for a variety of properties. In addition to huge distribution centers, the sector increasingly is looking for smaller, last-mile warehouses close to population centers.

To satisfy that need, “one of the major spaces that will be targeted for [warehouse] redevelopment opportunities will be indoor malls and retail strips,” said Justin Dunn, Senior Vice President of Development at Hilco Redevelopment Partners. “They are usually near dense populations, tend to have a decent amount of real estate… They set themselves up nicely for last-mile facilities” although most would have to be rebuilt to achieve needed clear heights.

In addition, cold storage facilities are in high demand, Dunn said. “We are extremely short on that product type… There are folks building spec cold storage. Strict cold storage is a very unique product and a lot of tenants…are 3PLs [third party logistics companies] so you have to get smart about what those trends are.”

Other market trends are creating other opportunities and challenges in industrial construction. Increasingly, distribution centers are incorporating big-data technologies, robotics and onsite solar power systems, Dunn said. As land becomes less available, industrial firms are also looking to create multi-story facilities on smaller sites, sometimes stacking manufacturing, warehouse, office and parking space in a single building.

“You have a whole other dynamic to these buildings that is driving design,” Dunn said. The projects “are all unique and have their own set of problems.”