Credit AutoStore
When investors think about warehouse automation or AI-driven logistics, their minds often jump to gleaming greenfield facilities built from scratch to accommodate futuristic systems. But as AK Schultz, co-founder of SVT Robotics, argued on The Real Finds Podcast, the real return on investment, the kind that moves the needle, is found not in greenfield but brownfield automation.
“Brownfield is where all the juice is,” Schultz said. “That’s where all the ROI is… because the money is in your existing operation.”
The hottest conversation in the industrial marketplace is the debate between greenfield vs. brownfield industrial space automation. It’s easy to assume that automation works best when you can build around it. After all, greenfield projects offer a blank slate. But Schultz warns that this perceived advantage can backfire. “It sounds less risky, but in some ways it’s more risky,” he explained. “If it’s a three-year build cycle, by the time it’s built, it may be obsolete… or your business may have slightly changed.”
This lag between design and deployment introduces technological mismatch risk—building for today with tech that may be outdated by the time the facility is operational. That risk is compounded by soaring construction costs. The average cost of new warehouse construction reached $135/sf nationally in 2023, up 54% since 2020. In infill markets like Chicago, that number is even higher, ranging from $200 to $300/sf.
Meanwhile, the rate of new warehouse construction has slowed dramatically. Data shows new starts in the U.S. industrial sector declined over 60% year-over-year. High interest rates and rising material costs have made speculative development economically unviable in many regions.
So if you’re not building fresh, and most aren’t, the question becomes: how do you make your existing assets work harder?
Brownfield automation is the retrofitting of existing industrial facilities with robotics, AI, and other automation systems. It’s a complex challenge, akin to an organ transplant, as Schultz described it, but it’s also where the most impactful operational savings can be unlocked.
Let’s unpack why.
A well-executed brownfield automation strategy can delay or eliminate the need for a new building.
“Sometimes you can save an entire building,” Schultz said. “Yes, it’ll save money in operational cost, but you may avoid a hundred million dollar building.”
This is not hypothetical. A 2023 report by McKinsey found that logistics providers who deployed automation in existing facilities reduced the need for new space by up to 30%. When you consider that a 1 million square foot build-to-suit can cost upwards of $200 million in today’s dollars, that’s not just operational efficiency, that’s capex avoidance.
Brownfield automation, especially modular or drop-in solutions, accelerates return on investment. Systems like Locus Robotics or AutoStore can be deployed quickly and without heavy structural modification.
“The two highest traction new tech [companies] are Locus Robotics and AutoStore,” Schultz noted. “These things are easily dropped into an existing facility with relatively low pain.”
In a Deloitte 2024 survey of supply chain executives, 67% said their top priority for automation investment was speed-to-value, not cutting-edge capability. Brownfield wins that race, every time.
Greenfield systems tend to fossilize an operation. Large-scale conveyor installations or bolted-down robotics are rigid and hard to reconfigure. That’s dangerous in a rapidly evolving fulfillment landscape.
“The capital asset becomes this… it almost fossilizes the business,” Schultz said. “It’s better to be less optimized and more flexible.”
Brownfield-focused robotics vendors increasingly offer modular solutions that allow operators to scale up or down based on demand, labor availability, or SKU velocity—without anchoring capital in static configurations.
The number one productivity killer in warehouses? Walking. According to the Warehousing Education and Research Council (WERC), warehouse workers spend up to 60% of their time walking between picks.
“The number one thing you can eliminate in terms of labor is walking,” Schultz emphasized. “That will take out 60% of the cost.”
Systems like goods-to-person robotics or autonomous mobile robots (AMRs) dramatically reduce walking time. And unlike building conveyor belts into a new facility, these technologies can be added incrementally to existing buildings.
In today’s interconnected warehouse, integrating robotics with WMS, ERP, and shipping platforms creates a web of dependencies. That’s where architectural abstraction matters.
“If we now have become a whole,” Schultz said, describing legacy systems tightly coupled with robotics, “you have to ask me [to upgrade]. You can’t upgrade independently.”
Without abstraction layers—systems designed to allow each module to upgrade independently—companies risk cybersecurity vulnerabilities and long-term upgrade bottlenecks. Brownfield-focused platforms like SVT Robotics prioritize this architectural independence, allowing legacy systems and new tech to coexist.
This also supports another key benefit: asynchronous innovation. As Schultz noted, “You can upgrade when you want. I can upgrade when I want. I’m not going to cause any problems around us.”
Brownfield automation isn’t plug-and-play. It requires a nuanced understanding of how people, processes, and technology intersect. Schultz compared it to sailing:
“There’s a lot of science… hydrodynamics, aerodynamics… but at the end of the day, you have to feel it. That’s where the magic happens. And it’s the same with deploying automation.”
The greatest challenge isn’t technical integration, it’s change management.
“You’re walking into someone’s operation and you gotta understand what they do,” he said. “One day their job was X, and now it’s Y. Not everyone is super excited about that.”
Successful brownfield projects require empathy, operational understanding, and what Schultz calls “transparent pipes and transparent boxes,” data architectures that allow visibility, not just functionality.
If you’re a warehouse investor or developer still thinking in terms of four walls and a roof, you’re missing the next wave of value creation.
For investors, this creates three major implications:
Tenant Retention: Brownfield-capable assets will outperform commodity Class A boxes that lack flexibility.
Higher NOI: Automation lowers operating expenses and increases throughput, translating to higher tenant productivity—and rent.
Exit Value: Future buyers will value real estate not just by rent roll, but by how easily it integrates with tech.
The next five to ten years won’t be defined by humanoid robots or AI hype cycles. Instead, Schultz predicts a shift toward accessibility and interoperability.
“Right now, you really have to be super skilled to even qualify to buy from robotics companies,” he said. “We’re never going to get mass adoption without solving that.”
The companies that win will be those that make automation approachable, modular, and easy to scale. As Schultz put it, “One plus one plus one equals 50… when you create inter-value exchange between systems.”
Brownfield is the sandbox where this will play out.
We’re still in the early innings of the warehouse automation game. Only 15% of warehouses utilize any form of automation, with most of that being legacy conveyor systems. The opportunity isn’t building new—it’s reinventing what already exists.
So, the next time someone tells you the future of industrial real estate lies in greenfield builds, remember what Schultz said:
“Brownfield is where the juice is.”
If you would like to learn more, you can watch our podcast with AK Schultz here, or for more on how we are applying automation in our clients’ Chicagoland industrial spaces, you can reach out to our team of local commercial real estate agents.
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