Most Americans know Ryder as a trucking company. With its signature white vehicles and red and black logo, the company is a familiar brand on the nation’s roads and highways. And for much of its 91-year history, trucking services have been the backbone of Ryder’s business.
But behind the scenes, Ryder now operates a growing network of warehouses and distribution centers that store and transport everything from packaged food and agricultural seeds to hospital equipment, printers, and cars fresh off the assembly line. Ryder trucks move these goods between manufacturing plants, warehouses, retail stores, and customer locations. At some of its facilities, it operates e-commerce fulfillment centers, pulling and packing online orders for delivery anywhere in the United States in as little as two days.
“For these solutions, the goal is to take it from port to door for our customers, through every step of the process,” says Josh Haber, who leads Ryder’s real estate planning and construction department as its group director. Logistics and supply chain solutions are now the company’s highest growth business, accounting for 41 percent of total revenue, up from 29 percent in 2018.
A GROWING REAL ESTATE PORTFOLIO
The growth of this business has made Ryder an unexpectedly sizable player in the U.S. real estate market. During the past three years, the company has added more than 25 million square feet of warehousing and distribution center space. It now manages more than 100 million square feet of space across approximately 300 such facilities. Ryder also operates more than 750 maintenance shops across North America. Unlike its warehouses and distribution centers, which are primarily leased, most of these maintenance facilities are owned by Ryder, totaling more than $1 billion in real-estate assets.
As Ryder’s real-estate portfolio has grown, data has become increasingly critical to managing it efficiently. In today’s challenging market, the Ryder real estate team of 16 portfolio managers, analysts, construction managers, and admins routinely pour over market leasing reports, pricing trends, economic statistics in markets and submarkets, and other data to make decisions about where to expand, where to consolidate, and whether to lease, buy, or build. “We eat, sleep, and breathe data,” says Peter Medrano, Ryder’s director of real estate planning. “It informs the where, what, and how of real estate decisions.”
DRIVING BOTTOM LINE IMPACT
Multiple sources of both internal and external data help Ryder’s team achieve two key objectives— acquiring the millions of additional square footage Ryder needs every year to serve its customers, and lowering costs. In today’s market, finding new warehouses and distribution centers isn’t easy. Continued e-commerce expansion has boosted demand, and high interest rates have weakened construction pipelines and diminished supply. For the past several years, industrial real estate has been the country’s hottest asset class, with vacancy rates at all-time lows: 1–3% in some markets. Data allows Haber and Medrano to compare the economic feasibility of signing a new lease in any market versus doing a ground-up development of a new warehouse or an acquisition of an existing facility.
Data also helps the Ryder real estate team make decisions that help lower costs on the hundreds leases the company renews annually across its network of warehouses and distribution facilities. Market leasing reports not only give insights on comparable rents but enables Ryder to keep its options open. Roughly 18–24 months in advance of a lease expiration, Ryder portfolio managers zoom in on square-foot pricing trends. If market economics look too challenging, Ryder may decide to acquire land to build its own facility. “That 18 to 24-month timeframe is what it would take to build a facility if we had to. “We always want to keep that leverage on our side in a very challenging industrial real estate market,” says Medrano, who worked as an asset manager in real estate private equity before joining Ryder six years ago.
Location is also a key factor. Often new facilities need to reside within a certain proximity to customer locations. But within that particular region or market, the Ryder real estate team uses data analytics solutions to identify unexpected opportunities in specific submarkets. To filter a quick view of the best locations for a particular customer or type of facility, they employ heat maps ranking 900 markets and submarkets. Variables include everything from construction pipelines and rent prices to purchase prices and vacancy rates.
AN INVESTMENT MINDSET
For properties Ryder acquires or builds, Ryder’s team applies a slightly different lens. With more than $1 billion in owned real estate assets, the company expects to generate returns from its significant capital outlays. Using current and historical market data (going back 15–20 years), Haber and his team model how a particular asset is expected to perform during the next decade and beyond. “We take an investment approach to every asset we invest our own capital into, since we expect that asset to produce,” adds Haber.
Although real estate returns aren’t likely to become a driving force in Ryder’s revenue mix, the company’s ability to cost-effectively manage its portfolio of warehouses, distribution centers, and maintenance facilities is a key enabler of its growth. For Peter Medrano, this will mean a continued focus on how he and his team can use data to derive better, more accurate insights to inform decision-making. “We’re always doing checks and balances on data from different sources to make sure we’re getting the full story,” Medrano says. “We couldn’t do this job without it.”