Industrial Buildings Are Looking a Lot More Like Modern Offices

• Heads in sheds: As advanced manufacturing grows, industrial buildings are working hard to become better workplaces.

• Sonder off: Marriott has ended its licensing agreement with the well funded, “tech enabled” hotel chain Sonder, forcing it into bankruptcy.

• Robot real estate: Starwood’s Barry Sternlicht has said that he has no choice but to lay off staff and replace them with artificial intelligence tools.

• Smart building trends webinar: Smart buildings are evolving as AI and connected systems redefine how properties think, adapt, and perform. Sign up

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Industrial

Industrial Buildings Are Looking a Lot More Like Modern Offices

For years, industrial real estate was seen as commercial property’s least glamorous asset—cheap, functional, and forgettable. But as manufacturing evolves into a high-tech, talent-driven industry, those concrete boxes are being reimagined. Tenants assembling semiconductors, EV components, and robotics equipment now expect the same digital connectivity and workplace quality as their office-based counterparts. That’s transforming the very identity of industrial buildings—from logistical workhorses to modern workplaces where engineers, programmers, and technicians want to spend time.

Developers and landlords are responding. They’re carving up mega-warehouses into smaller, flexible suites, introducing daylight, break rooms, and wellness amenities, and wiring spaces for advanced data infrastructure. Yet that flexibility comes with new challenges. Unlike offices, where IT needs are relatively consistent, industrial tenants vary wildly—from cold storage users to clean tech manufacturers requiring precise environmental control. Connectivity is another weak link; many industrial parks still sit in broadband deserts, forcing tenants to rely on imperfect solutions like Starlink.

Behind all this lies a bigger shift in mindset. Industrial space can no longer be defined by square footage alone—it’s a platform for digital operations. The same modernization wave that reshaped offices in the 2000s is now sweeping through warehouses and factories, bringing fiber redundancy, modular offices, and integrated operational technology. As competition for skilled labor grows, the next generation of industrial assets will be valued not just for efficiency, but for experience. In today’s market, comfort and connectivity are becoming just as important as concrete and clearance height.

Overheard

Sonder’s Fall Shows the Limits of the “Tech-Enabled” Real Estate Model

ISonder’s breakup with Marriott left thousands of guests stranded and marked a sharp turn for one of hospitality’s most ambitious tech-backed disruptors. The company, once valued at more than $2 billion and celebrated for blending software with short-term rentals, had built its brand on the promise that a tech platform could outperform traditional hotel management. Its partnership with Marriott was supposed to validate that vision. Instead, Sonder’s struggles with profitability and operations show just how fragile the “tech-enabled” real estate model can be when real-world logistics fail to keep pace with venture capital expectations.

Sonder’s rise was fueled by the idea that real estate, when powered by technology, could be treated like a scalable software company. That framing worked brilliantly in fundraising rounds, bringing in more than $700 million from investors who saw parallels with Airbnb. But scaling hospitality isn’t the same as scaling code. Occupancy management, cleaning, compliance, and service quality all hinge on physical execution. The broader lesson for other property companies trying to brand themselves as tech-first is that valuation premiums only last as long as the operational fundamentals hold up.

The Sonder unraveling may mark a cooling period for “tech-style” real estate startups. Investors are likely to push for evidence of durable unit economics rather than growth stories built on software multiples. That doesn’t mean the fusion of technology and real estate is over—far from it. But the next generation of firms will need to lead with operational discipline and let technology amplify their performance, not define it. Sonder’s fall doesn’t disprove the proptech model; it just proves that it has to be built on solid ground.

Barry Sternlicht’s AI Bet Shows Where Real Estate Labor Is Headed

Barry Sternlicht, founder of Starwood Capital, said in an interview this week that he plans to replace a significant portion of his workforce with artificial intelligence. He described AI as “an incredible productivity enhancer” and said that his firm is reviewing ways to use it to streamline operations, reduce costs, and handle more work with fewer people. The comments, coming from one of real estate’s most influential investors, underscore how seriously the industry’s leadership is taking automation. What began as quiet experimentation with AI in property management and investment analysis is now prompting visible shifts in how companies think about labor.

AI’s reach in real estate has already expanded faster than many expected. Brokerages are using machine learning to identify prospective buyers and tenants, developers are relying on AI-generated financial models, and investment firms are deploying algorithms to screen deals that used to take analysts weeks to evaluate. McKinsey recently estimated that generative AI could automate up to 45 percent of tasks in financial services and back-office real estate functions, from reporting to customer service. These tools have boosted efficiency but have also forced companies to rethink staffing and skills. Instead of hiring junior analysts, firms are investing in data scientists and AI-integrated platforms, changing the professional makeup of the industry.

The next phase will likely determine who thrives and who falls behind. As AI systems become capable of not only analysis but decision-making, real estate companies that integrate these tools deeply into their operations could dramatically lower costs and move faster than competitors. But the tradeoff will be cultural as well as operational. Efficiency may come at the expense of mentorship, collaboration, and creativity—the human elements that have long driven dealmaking. The firms that succeed will be the ones that can use AI not simply to replace people, but to enhance how people work together in a more automated industry.

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Propmodo Daily is written and edited by Franco Faraudo with contributions from readers like you and the Propmodo team.

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