Online sales in the U.S. are rising faster than ever today. The rapidly-progressing evolution of ecommerce is significantly impacting the industrial real estate market. Consumers are increasingly taking advantage of the speed, convenience and accessibility of online shopping, while retailers are racing to keep up.
Industrial Real Estate Growth
As more and more retailers move their inventory online, the demand for industrial warehouse space to assemble, store and distribute products increases. Rent growth in light-industrial warehouses has risen by 30 percent in the past five years to accommodate ecommerce demands and same-day delivery. National Real Estate Investor suggests that the demand for warehouse space will continue to grow in 2020, as will conversions of traditional retail space to distribution facilities.
More Warehouse Space
Consumers expect immediacy when it comes to online shopping, forcing retailers to improve and expand their supply chain. Online and omnichannel retailers are demanding more warehouse and logistics space to account for larger inventory and facilitate quick movement of goods to consumers. A CBRE Research study found that an additional 1.25 million square feet of distribution space is required to support each incremental $1 billion increase in ecommerce sales.
Location
More and more major omnichannel retailers, including Amazon, Walmart and Target, are offering one and two-day shipping, changing shipping expectations among retail customers. Increasing delivery speeds are boosting the demand for industrial real estate within close proximity to major highways and transit hubs. These central, populated locations allow ecommerce companies to deliver goods faster and more efficiently to customers while reducing transportation costs.
Technology and Design
Ecommerce has increased the pace and volume of operations for companies, forcing them to invest in space design and technology to manage a wide range of inventory as efficiently as possible. Companies, such as Amazon, are looking for technologically advanced facilities to accommodate automation and automated reality. These applications can help large retailers automate internal processes, save time and improve productivity in the warehouse.