What clear height is required for modern distribution centers?

Modern bulk distribution centers require 36-40 ft clear height to support racking systems and automation. Older DCs run 24-32 ft which significantly limits storage cube and rent potential. Cross-dock terminals (handling LTL freight that does not need racking) can operate at 24-32 ft clear. Last-mile DCs in urban infill often have lower clear heights (24-28 ft) due to existing building constraints. Clear height directly drives storage cube — a 36 ft building stores 50% more pallets than a 24 ft building of the same footprint.

Which REITs own distribution centers?

Prologis (PLD) is the global leader in distribution real estate with ~70% of its 1.2B SF portfolio in DCs across 19 countries. STAG Industrial (STAG) focuses on single-tenant DCs in secondary markets. First Industrial (FR), Terreno (TRNO), and EastGroup (EGP) own DCs in their respective focus markets. Major retailers (Amazon, Walmart, Target, Home Depot) increasingly own their own DCs rather than leasing — Amazon owns ~30% of its US DC footprint.

Distribution Center KPIs.

Distribution Centers are large-format industrial buildings (typically 200,000-1,500,000+ SF) serving e-commerce fulfillment, third-party logistics (3PL), retail distribution, and manufacturing. Performance is measured in clear height (modern bulk DCs run 36-40 ft clear), dock door ratio (1 per 7,500-10,000 SF for cross-dock; 1 per 12,000-20,000 SF for build-to-suit), trailer parking (2-4 spots per dock door), and tenant credit. Major tenants: Amazon, Walmart, Target, FedEx, UPS, DHL. Lease structure is typically NNN with 3-5% annual escalators + 5-10 year terms. Public REIT comparables: Prologis (PLD — DC giant with ~70% of total portfolio), First Industrial (FR), STAG Industrial (single-tenant focus), Terreno (TRNO — coastal infill), EastGroup (EGP — Sun Belt). Ilora.ai ingests rent rolls, NNN lease abstracts, building specifications (clear height, dock count, ESFR sprinkler density), tenant credit reports, and capital plans, then audits CAM reconciliation accuracy and benchmarks NOI per square foot against Prologis (PLD) peer-set data.

13 definitions · Sector: INDUSTRIAL · Used by Ilora.ai specialist AI agents

NOI: Total revenue minus operating expenses (excludes financing and capital costs). The primary measure of property-level profitability.
Cap Rate: Net Operating Income divided by current property value. Expresses unleveraged annual yield as a percentage.
DSCR: Net Operating Income divided by total annual debt service. Lender-required cushion measure; below 1.0 means NOI cannot cover debt.
LTV: Loan amount divided by property value. Lower LTV = lower lender risk.
OER: Operating expenses divided by gross revenue. Lower is better, but varies by property type (hotels run higher than triple-net retail).
GRM: Property value divided by gross annual rental income. Quick valuation shortcut; less precise than cap rate.
IRR: Annualized return on investment accounting for time value of money across the full hold period.
CoC: Pre-tax annual cash flow divided by total cash invested. Measures the cash yield, not total return.
DCF: Valuation method that projects future cash flows and discounts them to present value at a chosen rate.
TTM: A rolling sum of the most recent 12 months. Smooths seasonality for KPI comparisons.
PUE: Total facility power divided by IT equipment power. Lower is better — 1.0 is theoretical perfect.
SF Yield: NOI per rentable square foot. Comparable measure across industrial buildings of different size.
Clear Height: Distance from finished floor to lowest overhead obstruction. Drives storage cube and rent premium.

Sub-types

Sub-types within Distribution Center.

Bulk Distribution (500k-1M+ SF): Largest format — typically single-tenant cross-dock, dedicated to national distributor.
Multi-Tenant Distribution (200-500k SF): Multi-tenant DC serving regional 3PLs + smaller retailers.
Last-Mile DC: Smaller (50-200k SF) infill DC near population centers — e-commerce + same-day delivery.
Build-to-Suit DC: Custom-developed for single tenant on 10-15 year NNN lease.
Cross-Dock Terminal: Specialty cross-dock for less-than-truckload (LTL) consolidation.

Industry reference

How the distribution center sector operates.

Comparable public REITs / operators

PLD (Prologis — largest, ~70% of portfolio is DC)
FR (First Industrial Realty)
STAG (STAG Industrial — single-tenant DC focus)
TRNO (Terreno Realty — coastal infill DC)
EGP (EastGroup Properties — Sun Belt DC)
PLYM (Plymouth Industrial)

Frequently asked

Common questions about distribution center.

What clear height is required for modern distribution centers?: Modern bulk distribution centers require 36-40 ft clear height to support racking systems and automation. Older DCs run 24-32 ft which significantly limits storage cube and rent potential. Cross-dock terminals (handling LTL freight that does not need racking) can operate at 24-32 ft clear. Last-mile DCs in urban infill often have lower clear heights (24-28 ft) due to existing building constraints. Clear height directly drives storage cube — a 36 ft building stores 50% more pallets than a 24 ft building of the same footprint.
Which REITs own distribution centers?: Prologis (PLD) is the global leader in distribution real estate with ~70% of its 1.2B SF portfolio in DCs across 19 countries. STAG Industrial (STAG) focuses on single-tenant DCs in secondary markets. First Industrial (FR), Terreno (TRNO), and EastGroup (EGP) own DCs in their respective focus markets. Major retailers (Amazon, Walmart, Target, Home Depot) increasingly own their own DCs rather than leasing — Amazon owns ~30% of its US DC footprint.