Power Becomes The New Site Selector In Logistics Real Estate

As grid constraints intensify and power reliability comes under pressure, logistics real estate is evolving from a supply-chain support function into a platform for energy innovation, according to a white paper from Prologis.

While site selection has traditionally focused on proximity to ports, highways and labor pools, energy readiness is now just as critical. The rise of electric vehicle fleets, automation and data-intensive operations is making reliable, scalable power essential to operational continuity.

Companies are increasingly prioritizing facilities equipped with on-site generation, microgrids and advanced energy management systems to maintain uptime, manage costs and navigate a rapidly changing energy landscape. Collaboration among landlords, tenants and utilities is giving rise to flexible regional energy ecosystems that strengthen grids and improve resilience. As a result, warehouses and distribution centers are becoming hubs of innovation, delivering efficient, reliable power that supports logistics growth, sustainability objectives and long-term resilience.

While access to transportation corridors and population centers continues to offer advantages such as faster fulfillment and lower costs, Prologis notes that facilities with on-site generation, battery storage, microgrids and electrification capacity are better positioned for scalability and long-term stability.

Investing in energy infrastructure can be challenging for leased distribution centers, particularly when payback periods extend beyond lease terms. To address this, Prologis has introduced a distributed energy model that allows the company to invest in solar, storage and on-site generation, with tenants accessing power through energy service agreements.

“We take on the vacancy risk so we can align power payments with lease terms, providing customers with competitively priced energy,” said John Hoekstra, head of enterprise sustainability at Prologis. “That helps them meet sustainability goals without committing large amounts of capital.”

Shared generation solutions, such as community solar, also offer renewable energy and flexible backup for multi-tenant properties or sites with limited rooftop capacity. These models enhance site resilience while supporting broader regional energy systems and long-term value creation.

The white paper points to data centers — among today’s most energy-intensive facilities, often requiring 50 megawatts or more per site — as a reference point. These facilities rely heavily on the grid, supplemented by standby generation and demand-response programs to manage load and ensure continuity, offering lessons for logistics operations facing rising power demands.

As commercial fleets transition to zero-emission vehicles, logistics facilities must increasingly deliver power alongside physical space. On-site solutions such as microgrids and linear generation are being deployed to support EV charging. By designing facilities with charging infrastructure in mind — including space requirements, electrical loads and permitting — real estate partners can help tenants accelerate electrification and future-proof their operations.

Source: GlobeSt