e-commerce driving development and construction decisions

Although retail analysts in recent years have focused on the decline of bricks and mortar space, due to the explosion in e-commerce, that same explosion is creating a demand for the building of more fulfillment centers.

“The proportion of consumers who believe that receiving goods in three to four days constitutes ‘fast shipping’ fell to 35 percent in 2017, down from 42 percent in 2016 and 53 percent in 2015,” says a recent report published by the Urban Land Institute.

That report, called the Emerging Trends in Real Estate 2019, notes that with increased consumer expectations of fast e-commerce delivery has come a need for new facilities vital to the new economy’s supply and demand chain.

E-commerce fulfillment facilities represent approximately 20 percent of new leasing in industrial real estate, says the report, “with online sales generating three times the demand for warehouse/distribution space compared with in-store sales.”

 Large - and many times even massive - facilities that can satisfy what is known as the “final step” in the supply chain, are going up everywhere across the country, notes the report.

“The economics of development have been incentivizing larger projects to a higher degree than ever before, with new supply consisting largely of big boxes,” the report adds.

Such projects are typically being built in open spaces beyond urban cores where “large plots of land are more plentiful.”

Perhaps not surprisingly, the Urban Land Institute rates highly such fulfillment center and warehouse projects, from both an investment and development perspective.

Also at the top of the ULI’s investment/development list: senior housing, medical offices, and moderate-income workforce apartment projects.

By Garry Boulard

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