By: Devon Hyatt, Director of Business Development, ARCO Design/Build

Hero image photography credit: Natalie Cass

NAW members sit at the backbone of the U.S. supply chain – an $8+ trillion wholesale distribution industry employing millions and powering nearly a third of the economy. When you decide to build a new distribution center or major expansion, one of the earliest decisions you make is also one of the least examined: how the project gets delivered.

In today’s environment of tight industrial supply, rising rents, and evolving logistics models, many distributors are asking a version of the same question:

“Should we use a traditional construction approach or a design/build partner? And why?”

As the #1 builder of distribution centers and warehouses in the country (ENR), we’ve seen this decision play out on thousands of projects. ARCO has delivered more than 1.3 billion square feet across 46 states, and the pattern is consistent: how you deliver the project shapes the outcome as much as what you build. Here’s how the three most common delivery methods compare – and when design-build is the right fit.

Why Delivery Method Matters for Distributors

For a wholesaler-distributor, a new distribution center acts as an operating asset that drives revenue, service levels, working capital, and labor efficiency. Three realities make the choice of delivery method especially important:

• Speed-to-market is now a competitive weapon. Every month a distribution center comes online early, or late, directly affects revenue, margin, and network resilience. Industry research over the last two decades shows that integrated delivery methods, especially design/build, consistently deliver projects faster than other delivery methods.
• Complexity has crept into “simple” warehouses. Even an “ambient” distribution center now embeds sophisticated racking, automation, warehouse management system integration, complex mechanical, electrical, and plumbing systems, or sometimes cold chain elements. Those systems are tightly coupled with the building shell and slab design. Delivery methods that separate design from construction struggle with that integration.
• Risk and capital discipline matter more than ever. As distributors shift from short-term leases into owner-occupied or build-to-suit projects in response to rising rents and low vacancies, they are taking on more capital risk directly. Choosing a delivery model that brings earlier cost certainty, fewer change orders, and a single accountable partner changes the risk profile of a project.

The Three Main Ways to Deliver a Distribution Center

While there are many variants, most NAW members will be choosing among three primary delivery models for a new distribution center.

Design-Bid-Build (“Traditional” or “Plan & Spec”)

How it works:

1. You contract directly with an architect and engineers.
2. They develop full construction documents.
3. The project is bid to general contractors; you select a contractor through competitive bidding.
4. Construction proceeds under a separate contract with the general contractor.

In practice, this model can underperform on modern distribution projects where speed and integration are critical.

Construction Manager at Risk (CM-at-Risk)

How it works:

1. You select a CM based on qualifications and fees.
2. The CM provides preconstruction services (estimating, constructability, phasing input) while design advances under a separate contract with your architect.
3. At an agreed design milestone, the CM commits to a GMP and then bids and holds subcontracts.

CM-at-risk can be appropriate for highly complex, mission-critical distribution centers where you want independent design oversight but also need early contractor involvement.

Design-Build

How it works:

1. You select a design-builder (often based on qualifications and industrial experience).
2. That team leads design, engineering, estimating, and construction as one integrated process.
3. A lump sum or GMP is typically established earlier in design.

For many modern distribution projects, that integration is the deciding factor.

How Design-Build Performs in Practice

Independent research points in the same direction as what we see on our projects.

• A major CII/DBIA benchmark study found design-build projects delivered lower unit cost and faster schedules than design-bid-build and CM-at-risk, on average.
• A meta-analysis of 4,623 projects across 30 studies concluded that design/build is most effective at controlling cost growth and achieving the fastest delivery, with CM-at-risk intermediate and design-bid-build the slowest and most change-order-prone method.
• FHWA’s Design-Build Effectiveness Study reported an average 14% reduction in total duration and ~3% reduction in total cost for design/build vs design-bid-build, with no decline in quality and significantly fewer claims, which averaged less than 0.1% of total project costs.

The warehouse and distribution market has started to take notice of these outcomes, as this 2024 Utilization Study reports that 43% of developers in the sector are pursuing projects using the design-build delivery method.

When Design-Build is the Best Fit

Across hundreds of large distribution centers and cold-chain facilities for wholesalers, third-party logistics providers, and retailers, some clear patterns have emerged about when design-build is most advantageous.

1. Speed-critical greenfield facilities or expansions

If your business case depends on hitting a hard in-service date—whether to consolidate legacy facilities, secure a key customer contract, or relieve market-driven capacity constraints—schedule often dwarfs small differences in delivery fees.

Design-build lets the project team work in parallel rather than in sequence:

• Advance entitlements and permitting alongside design
• Release early site, foundations, and steel packages while interior and equipment design are still being refined
• Procure long-lead items (switchgear, transformers, specialty refrigeration, certain roof systems) during design, rather than after bid.

In one recent example, ARCO delivered a 1.44-million-square-foot distribution center with 150 dock positions and 350+ trailer stalls in approximately eight months from pile installation to owner move-in, a timeline that would be extremely difficult to replicate under design-bid-build.

2. Facilities with meaningful complexity

As soon as you add multi-temperature zones, refrigerated dock space, high-bay racking, automated storage and retrieval systems, heavy conveyor systems, or H-occupancy and chemical storage classifications, the value of aligning building design, process engineering, and constructability inside one accountable team rises sharply. Misalignment between those functions under other delivery methods is a common root cause of change orders and operational compromises.

In ARCO’s model, Design/Build Managers act as the single technical and commercial point of contact—estimating, planning, coordinating engineering disciplines, and managing trade partners across the full life of the project. That integration is particularly valuable for NAW members moving into cold storage or automation-heavy distribution centers for the first time.

3. Owner-occupied or build-to-suit distribution in today’s market

Since 2023, industrial rents and low vacancies have been pushing more wholesalers to consider owning or building-to-suit rather than simply leasing spec space. Traditional delivery runs entitlements, design, bidding, and construction in sequence. That can expose you to 18-30 months of escalation risk before you open the doors. By contrast, design-build allows concurrent entitlements, design, and procurement, often cutting months out of the process and reducing your exposure to inflation.

For a build-to-suit facility, design-build delivery offers the strongest combination of cost control and schedule certainty among own-versus-lease alternatives.

4. Programmatic or multi-site rollouts

If you plan to build multiple similar facilities across different markets, design-build is especially powerful. ARCO often develops a prototype distribution center – with shell, dock configurations, material handling equipment standards, and cold-chain strategies – then repeats and adapts that prototype across markets, capturing learning-curve benefits, standardization, and bulk purchasing advantages.

This is part of why more than 75% of ARCO’s annual revenue comes from repeat clients. Owners find the design-build model effective for ongoing network optimization.

The Bottom Line

The last two decades of independent research tell a consistent story:

• Design-build, done well, delivers faster schedules, tighter cost control, and fewer surprises than design-bid-build and typically outperforms CM-at-risk on core performance metrics.
• Traditional models still have a place, particularly where procurement rules demand low-bid awards or where owners have unique reasons to keep design and construction contractually separate.
• For most NAW members planning a new distribution center – especially those facing aggressive timelines, meaningful technical complexity, or limited internal construction staff – integrated design-build with an experienced industrial partner is usually the strongest fit.

If you’re contemplating a new distribution center, cold-chain facility, or major expansion, the most impactful step you can take is to engage a qualified design-build partner early, while you’re still evaluating sites and shaping your operational strategy.

From there, a structured process turns a high-risk, high-complexity undertaking into a controlled, repeatable play.

The opportunity is to treat your next distribution center as what it is: an operating asset that will shape your network for the next twenty years.

---