New kid in town

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by Emily Atkins

There’s a new player on the industrial real estate block in the Greater Toronto Area, and they claim to be the only ones offering real estate services and distribution centre/warehouse design in one package.

LIDD Supply Chain Consultants opened a Toronto area office in 2015 and added a real estate practice in October 2106.

Jesse Micak

Jesse Micak the principal and broker of record at LIDD Toronto Brokerage Inc—the real estate arm—took a few minutes to explain the concept in an interview.

LIDD got its start in Montreal as a supply chain engineering and consultancy, and now has 22 employees, operating across North America. Its engineering and consulting practice was the original business.

The real estate practice came about after Micak spent time collaborating with LIDD in his capacity as vice-president of industrial for a major real estate firm. Seeing the synergy, it made sense for LIDD to consolidate and bring the real estate expertise in-house.

“What we do is help organizations make investment decisions or infrastructure decisions in their supply chain,” Micak said. “Anything from the facilities, the material handling, to the IT systems that run a supply chain.”

LIDD only serves the industrial market, he says, with all of its business being end-user assignments. In other words, it does not represent landlords or take listings. The real estate service dovetails with supply chain strategy and design services for those companies that require it, provided by the group’s team of veteran consultants.

Avoiding pitfalls

LIDD positions its services as designed to “advise our clients on how they can mitigate the risks associated with poor infrastructure decisions that can create long-term operating penalties,” Micak said.

“We know from experience that within an infrastructure decision, there’s really four areas where capital can go to waste.”
First is the language of the lease agreement. “If a lease is not negotiated properly you can have language that is onerous and favourable to the landlord.” There are many areas in a 40 to 50 page lease agreement that if not attended to can “be a profit centre for the landlord,” Micak warned.

Second is in the facility size or location. Buildings can be too big to too small, the column spacing can be off, the clear height may be inappropriate, the dock size may be too small. LIDD’s consultants can help to optimize the overall layout and functionality of a location.

The implementation is another area where mistakes can be made. The pick-line layout, the WMS integration, order configuration can also be inadequate, so LIDD has specialists on staff who can ensure an efficient implementation is achieved.

The final area for potential loss is in the lease negotiation itself, Micak noted.

“We know that real estate companies know a lot about real estate, but might be at a loss when it comes to designing the interior of a distribution centre, “ he said. “Under one roof what we try to do is seamlessly integrate the design, implementation and the optimization of a facility.”

As a brokerage, LIDD gets paid by the landlord for the real estate services, and the optimization and integration consulting is charged on a fee-for-service basis.

Although they have done work for companies of all sizes, the sweet spot is in the $50 to $200 million revenue range for private companies. LIDD has also done quite a bit of work government agencies, including assisting the Alberta Gaming and Liquor commission to establish a new DC outside of Edmonton.

The consulting business extends through much of Canada with about 50 percent of its contracts in the US. While the real estate portion of LIDD’s business is confined to Ontario for the moment, the company does plan expansion to other provinces in time.

“Toronto is a very exciting market for us right now,” Micak said. “It’s the third-largest in terms of industrial square footage in North America, behind Orange County/Los Angeles and Chicago, Illinois, so it was a natural step in the evolution of the company.”