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Prologis Looks To Provide More Than Real Estate for Tomorrow’s Electric Truck Fleets

One of World’s Largest Logistics Property Owners Goes Proactive in Adding Charging Systems

Prologis, with logistics properties including this New Jersey facility, is taking action to boost electric and other clean-energy systems geared to delivery trucks. (Prologis) Photo via CoStar

By Lou Hirsh CoStar News March 22, 2022 | 7:53 P.M.

Prologis, one of the nation’s largest owners of logistics properties, is looking at creating systems needed to power the electric truck fleets that are expected to be used at its properties in coming years.

The company's executives said at an industry conference in San Diego this week that they could move beyond merely providing industrial space to respond to tenant concerns about the potential phaseout of fossil fuels. Their clients say increasing global reductions in the use of diesel and other polluting fuels will make it harder for logistics firms to do business if industrial buildings can't support cleaner alternatives, including electrical vehicle charging.

“What it is that we’re really looking to do is spend more time with our customers and help them prepare for the transition to near-zero emissions,” said Henrik Holland, senior vice president and global head of electrical vehicle charging at San Francisco-based Prologis. Bringing industrial vehicle charging and other technologies to wide-scale commercial use probably means property owners like Prologis will need to play a much bigger role in creating the systems that make it happen.

“A huge challenge in the mobility space is that the infrastructure requires an eight-, 10-, 15-year horizon for investment, and most of our customers are not the naturally best positioned players to take on that responsibility,” Holland told the crowd during a session at a national conference presented this week by commercial real estate technology trade group CRETech.

The United States and several other countries have taken steps to phase out the sale of vehicles operating on diesel and other fossil fuels over the next 20 years. California moved in 2020 to require that all new cars and passenger trucks sold in the state be zero-emission by 2035, and the same rule will apply to commercial delivery trucks starting in 2045.

Electric vehicles have quickly moved toward the mainstream in passenger cars, but remain sparsely deployed in the commercial trucking industry. However, automakers and technology firms are working with major delivery providers, including Amazon, FedEx and UPS, to accelerate development of electric-powered commercial trucks.

According to industry data firm Statista, the number of electric trucks operating worldwide is projected to grow to 324,100 by 2026, up from 10,200 in 2018. The data firm said “medium-duty” trucks — along the lines of Amazon and UPS vans making home deliveries — are expected to represent more than 93% of the global electric commercial vehicle fleet, as it may take longer to develop the infrastructure for heavy-duty big rigs.

'Technology Is Here'

Prologis and other large industrial property owners are now looking to speed the adoption process by working with tenants, tech firms and sometimes utility companies to get systems in place faster than it would normally take to get energy providers and users on board.

“The technology is here. It’s not a matter of if; it’s about when,” said Will O’Donnell, managing partner at Prologis Ventures, which invests in logistics-related technology companies. In the future, standard industrial leases could include provisions for what the tenant will pay Prologis for energy use on a kilowatt-hour basis.

Warehouses and entire industrial parks are likely to be configured and located based on elements such as placement of electric vehicle charging stations and the solar power arrays that are often used to generate the energy for chargers.

Hydrogen-powered alternatives, increasingly used for large commercial vehicles, could also figure into planning at some logistics campuses. Landlords like Prologis will also generate additional revenue by offering tenants energy metering tools to help them plan delivery routes and other logistical improvements.

“These vehicles are going to have to charge where it makes operational sense,” O’Donnell said. “In many cases, it’s going to be at a warehouse or next to a cluster of warehouses.”

The changes come as employees at many types of tenant companies are calling on executives to adhere to environmental, social and governance practices, better known as ESG policies, that are environmentally friendly.

“Now the cool thing is, you have better data for what happens at your facility,” Holland said. “Now we can start optimizing the EV station routes, we can start planning for additional EV stations off-site.”

In the shifting scenario, O’Donnell said real estate companies will also need to go beyond the realm of real estate experience when hiring new managers and executives, looking for personnel from the worlds of technology and energy. Holland, for instance, is a former executive with energy giant Shell.

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