How Will E-Commerce Impact Industrial Real Estate in 2019
The industrial market continues to evolve as the e-commerce trend is increasing the consumer demand for quicker delivery of products. This demand is driving the need for industrial space. There has been a big jump in the development of massive distribution centers and a swift rush by e-commerce players and retailers for well-situated “last-mile” fulfillment centers located near consumers to meet their fast delivery expectations.
Let’s take a look at how e-commerce will impact industrial real estate in 2019.
The Space Challenge
One of the biggest changes e-commerce will have on industrial is that in the past it was crucial to locate industrial facilities near labor pools, but now, it is important to be near rooftops for e-commerce logistics benefits. However, retailers will need to get more creative to get closer with these last-mile distribution hubs. Research by CBRE found that these hubs now extend no further than six to nine miles away from 15 major metro statistical areas. Retailers like Walmart, Amazon, Chewy.com and many others are driving this activity since they are increasing the need for same-day delivery. These require easily accessible warehouses.
The new “retail model” will require distribution centers to be compatible with online purchases. These facilities will need to house state-of-the-art technology and high ceilings and be located near highly-populated areas. The development of these modern industrial properties will continue as e-commerce companies like Amazon demand them.
These modern facilities need to have technology that can help consumers track their item from ordering to delivery, receive overnight or same-day delivery, offer green packing/waste reduction and each order must be met with 100 percent accuracy. These are some of the top consumer demands when it comes to e-commerce.
Facilities will also begin to employ robots to begin performing tasks. This will, in turn, change the structure and design of warehouse distribution centers. Robots need highly flattened surface to transport and can also move vertically more so than a human can. In e-commerce facilities, robots will begin to take on packing and shipping tasks. The smaller human labor force in these facilities means there is less of a need for parking and warehouses can be built taller.
E-Commerce Will Continue to Boom
E-commerce is no longer a trend but a staple in the retail and industrial sectors. Companies like Kohl’s are seeing the value in teaming up with these e-commerce companies. Kohl’s now accepts Amazon returns and has a few Amazon pop up shops in various stores around the country. According to Goby, in 2016, consumers in the United States bought $400 billion of goods online and e-commerce sales have been increasing by 15% per year.
E-commerce has entirely reshaped how the industrial sector operates. Fulfillment centers now need to be located in the center of the population to adhere to high consumer demands for quick delivery and deliveries need to be handled with high accuracy. The competition for space and the need to meet all of the consumer demands are just a couple of ways e-commerce is impacting industrial real estate.