For much of the modern logistics real estate era, warehouse selection has revolved around a familiar set of questions. Is the facility in the right location relative to ports, motorways, suppliers and customers? Is there enough space for the required inventory and throughput? Does the building specification, including clear height, dock doors, floor loading and layout, support the operation?
Those criteria remain fundamental, but another consideration is moving steadily higher up the site-selection agenda: whether a facility has sufficient, reliable and expandable access to electricity.
Prologis identified the need for power-ready logistics facilities capable of supporting automation and manufacturing as one of the top three global location factors for 2026. Its research also notes that fully automated facilities can use three to five times more power than the 2024 baseline, while grid delays and connection caps are already constraining development in several markets.
The issue is not simply how much electricity a warehouse consumes over the course of a year. Contracted capacity, peak demand, power quality, transformer and substation capacity, grid connection timelines and the ability to expand capacity later can all determine whether a facility is suitable for a particular operation. A warehouse can therefore satisfy the traditional requirements and still create a significant constraint for the supply chain it is supposed to support.
Why warehouse power demand is rising
The change is being driven by several developments taking place at the same time. Automation is one of the most visible. Conveyor systems, automated storage and retrieval systems, autonomous mobile robots, high-speed sortation and automated picking equipment have become increasingly common in modern distribution facilities. Each technology has its own energy profile, and the requirement can vary substantially depending on the operating model.
A highly automated fulfilment centre, for example, may have a very different electricity requirement from a conventional pallet-storage warehouse. A temperature-controlled facility introduces another layer of demand through refrigeration and HVAC systems. A parcel hub operating intensive sortation equipment may have particularly high periods of peak demand.
That distinction matters because electricity requirements are not measured simply by annual consumption. A facility may have sufficient energy over the course of a year but still lack the contracted capacity required to operate multiple systems simultaneously during peak periods.
Electrification of transport is adding another consideration. Distribution centres supporting electric delivery fleets need charging infrastructure capable of handling multiple vehicles, often within relatively narrow operating windows. As fleet electrification increases, charging demand becomes part of the facility’s overall load profile rather than a separate transport issue.
The same infrastructure is also being sought by manufacturing users, which are increasingly locating production and distribution closer together. A logistics facility supporting light manufacturing, assembly or other value-added activities may consequently require considerably more power than a traditional storage operation.
This convergence is changing the economics of location selection. Electricity is no longer simply a utility that follows the building. In some markets, it is becoming one of the factors determining whether the building can support the intended operation in the first place.
Data centres are adding pressure to the same infrastructure
Data centres are a different type of user from warehouses, but their expansion is relevant to logistics because they compete for elements of the same infrastructure ecosystem.
A data centre typically requires much higher power density, cooling capacity and redundancy than a logistics facility. It would therefore be misleading to suggest that warehouses and data centres are simply competing for identical buildings.
The competition occurs further upstream, around industrial land, substations, transmission infrastructure and grid connection capacity.
In markets where data-centre development is accelerating, securing new electrical capacity can become more difficult for other industrial users. Prologis has described this broader convergence of physical, digital and energy infrastructure as an increasingly important feature of logistics real estate. Its 2026 reporting also points to the growing importance of securing and expanding access to power as part of development strategy.
For logistics operators, this creates a less visible form of competition. A company may not be competing with a data centre for warehouse space, but it may be competing for access to the infrastructure needed to develop or expand an industrial site.
Why building more warehouses does not solve the problem
The conventional response to a shortage of logistics space is straightforward: build more. Power constraints make that solution considerably more complicated.
A developer can secure land, planning permission and financing and still be unable to bring a facility into operation on schedule if the required grid connection is not available. In several major markets, connection timelines have stretched into years, while grid constraints and connection caps are limiting new development. Prologis specifically identifies Europe, Mexico and the United States among the markets where power availability is becoming a significant development constraint.
That changes the development sequence. Land may be available before power is. A building may be physically complete before its full electrical capacity is secured. An occupier may also discover that expanding its operation requires a second infrastructure upgrade that was never considered during the original site selection.
The implication is important for companies planning new facilities. Securing a building and securing the infrastructure required to operate that building are increasingly becoming two separate questions.
In some locations, developers are responding with alternatives to conventional grid supply. Prologis, for example, has introduced onsite power solutions incorporating generation, energy storage and microgrid systems as a response to long grid-connection timelines. Its Almere facility in the Netherlands uses a renewable-first microgrid after insufficient grid capacity made conventional expansion difficult.
These solutions will not be appropriate for every warehouse, but their emergence illustrates how the definition of a modern logistics facility is changing.
The supply of new space is already constrained
Power is becoming more important at a time when new warehouse supply is already under pressure in several major markets. The ULI/PwC Emerging Trends in Real Estate 2026 report found that US industrial starts in 2025 were 25% below the 2017–2019 average and projected that 2026 deliveries would be more than 70% below the pandemic peak. It also reported that replacement-cost rents were approximately 20% above Class A market rents, making speculative development harder to justify in many locations.
This matters because a constrained development pipeline reduces the number of opportunities for occupiers to simply move into a newer facility when their existing building no longer meets their requirements.
It also makes the specification of existing stock more important. A vacant warehouse is not necessarily a suitable warehouse. It may have the right floor area and location but insufficient electrical capacity for automation. It may have the right power supply today but no realistic path to increasing that capacity as the operation grows.
This creates a distinction between available space and usable space. For a supply chain operation, usable space is the building that can support the required throughput, equipment, temperature conditions, fleet infrastructure and future expansion without creating disproportionate cost or delay.
Europe illustrates how different the problem can be from one market to another
The European logistics market provides a useful illustration of why power availability needs to be assessed at corridor and market level.
Prologis expects European logistics vacancy to fall below 5% during 2026, while individual markets are experiencing very different levels of supply and demand.
Poland, for example, has developed into one of Europe’s important logistics and manufacturing locations, but vacancy conditions differ significantly between regions. A national-level view can therefore obscure the practical availability of suitable space around a particular industrial corridor.
Power introduces another layer of variation. A facility near a major population centre may appear strategically attractive because of its access to customers and transport infrastructure. Yet if the surrounding grid is constrained and additional capacity cannot be secured within the required timeframe, the location may not work for an automated operation.
The Netherlands provides a useful example of the broader issue. Prologis has previously highlighted grid congestion in the country and developed a microgrid-powered logistics facility in Almere after conventional power access proved insufficient.
Germany has also experienced concerns around power reliability. Prologis research cited in its 2026 outlook reported that 44% of surveyed German executives had experienced voltage fluctuations affecting equipment in the previous year, while 38% reported rolling blackouts or brownouts.
These examples do not suggest that European logistics facilities are generally unreliable. They show that power infrastructure needs to be evaluated alongside the traditional criteria used to assess a location.
The United States faces a similar problem from a different angle
The US logistics market has its own combination of constraints. Industrial vacancy and new construction are being influenced by the limited supply of modern facilities, elevated construction costs and increasingly selective development. Prologis reported in May 2026 that US industrial deliveries were already around 20% below the pre-pandemic average, with scarcity emerging in selected locations and building types.
The result is that headline vacancy can become misleading. A warehouse may technically be available, but if it cannot support the required automation, refrigeration, fleet charging or manufacturing equipment, it may have little practical value to a particular occupier.
This is especially relevant for businesses making long-term network decisions. A facility that appears cheaper on rent can become considerably more expensive if the occupier has to fund substantial electrical upgrades, wait for a grid connection or operate below its planned capacity.
Power therefore needs to be considered as part of total occupancy cost rather than as a separate facilities-management issue.
What about Asia and emerging logistics markets?
The power question is equally relevant in Asia, although the development context is different. India, for example, is expected to enter a logistics development and leasing boom as modernisation, e-commerce and industrial growth drive demand for new facilities. Prologis has identified India as one of the international markets expected to see particularly strong development and leasing activity in 2026.
Southeast Asia is also attracting manufacturing investment and developing more sophisticated logistics networks. Greenfield development provides an opportunity to incorporate modern warehouse specifications from the beginning rather than retrofit older industrial stock.
However, a new building does not automatically mean reliable power. Grid capacity, connection timelines, voltage stability, transformer availability, backup systems, land-use approvals and supporting infrastructure still vary considerably between countries and individual industrial zones.
For businesses evaluating Asian production or distribution locations, this makes local infrastructure knowledge particularly important. A site may be geographically well positioned between a manufacturing cluster and a major port, but the economics change if the facility cannot secure sufficient electricity for the intended operation.
The same principle applies across the GCC, where logistics and industrial development are expanding alongside data centres, manufacturing and broader infrastructure investment. The availability of land is only one part of the development equation. Power, water, transport connectivity and the ability to scale infrastructure need to be considered together.
Power should become part of the site-selection process
The practical implication is that power assessment needs to move earlier in the facility-selection process. Rather than asking only whether a building has electricity, occupiers need to understand the quality and scalability of that supply. What is the contracted capacity? What is the current peak demand? How much spare capacity is available? What transformer and substation infrastructure serves the site? How long would an additional connection or capacity upgrade take? Is backup generation available, and what systems are supported during an outage?
The answers become particularly important when a company is planning automation or fleet electrification that may not be fully deployed on day one.
A warehouse should be evaluated against the operation it is expected to support several years from now, not simply against today’s requirements. That does not mean every logistics facility needs the maximum possible power capacity. Over-specifying infrastructure can add unnecessary cost. The objective is to understand the expected operating model, identify its current and future energy requirements and then assess whether the location can accommodate them at a commercially sensible cost.
This is also where logistics operators and real estate teams need to work more closely. Site selection is increasingly becoming a cross-functional decision involving supply chain, operations, engineering, finance and property rather than a property decision made in isolation.
The definition of a good logistics location is changing
For decades, the best warehouse location could be described largely through physical and geographic criteria. It needed to be close to customers, suppliers, ports, motorways and labour, with a building capable of handling the required volume.
Those factors still matter. In fact, they remain the foundation of effective logistics network design.
What is changing is the infrastructure sitting underneath the building. Automation is increasing electricity demand. Fleet electrification is adding another load. Manufacturing and logistics are increasingly sharing industrial locations, while data-centre development is intensifying competition for power infrastructure in selected markets. At the same time, grid connection timelines and new construction constraints are making it harder to respond quickly by simply developing more space.
The result is a more demanding definition of warehouse suitability. A strategically located facility with excellent transport access can still become a bottleneck if its electrical infrastructure cannot support the operation. Conversely, a facility with slightly higher occupancy costs may prove more valuable if it offers dependable power, room for expansion and a realistic path to future capacity.
As logistics networks become more automated and energy-dependent, electricity is moving from the background of the warehouse decision to the centre of it. The question when evaluating a new facility is no longer simply whether the building has enough space, the right docks or the right location. It is whether the infrastructure behind the building can support the supply chain today, and whether it can keep supporting it as the operation changes.