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How E-Commerce is Impacting CRE

September 27, 2017

How E-Commerce is Impacting CRE on morrissegroup.com

Retailers are spinning a logistics web around the country

A lot has changed since 2011. That’s when a blog post on this site stated: “Many consumers still want to see or touch goods before they purchase, so they still go into a physical store to get this experience.”

That statement still holds somewhat true, but e-commerce has continued to grow by leaps and bounds in the past six years – and fewer consumers have to go into a physical store to touch the goods before they purchase them. Instead, many more people are shopping while sitting with their laptops in coffee houses and microbreweries, at home on the couch, or via their phones while waiting at the bank.

Big numbers for e-commerce

When it comes to e-commerce, the numbers are tremendous. In 2016, global e-commerce reached $1.9 trillion. In the United States, the National Retail Federation predicts online retail will grow 8% – 12%. In dollars and sense, this means e-commerce sales are expected to be between $427 billion and $443 billion.

As a result of these numbers, retailers are renting industrial space at breakneck speed in order to fulfill online orders. According to a report in Business Insider, the second quarter of 2016 saw the most square feet – nearly 70 million – of industrial space leased in the past 30 years. At the same time, warehouse availability has decreased.

In other words, retailers are leasing warehouses faster than new ones can be built.

What’s the driving the e-commerce force?

In its infancy, e-commerce retailers were interested in specialized buildings. The emphasis is now on logistics and proximity to consumers. Although Amazon, Walmart, and Apple are the big three e-commerce retailers, more and more retail corporations are jumping into the e-marketplace.

To remain competitive, those in the game – including the big three – have had to up the ante with free shipping and rapid delivery. While some of the e-retailers envision drones crisscrossing the sky, at the moment, most consumers will receive their packages via traditional UPS, Fed Ex, or USPS delivery.

The solution to remaining relevant in this competitive e-world is leasing or building distribution centers near major population hubs. Because it’s a growing industry, there are specific demands that e-retailers require in their warehouse space:

  • Higher ceilings to accommodate shelving and top stock;
  • More dock doors for the loading and unloading of goods; and
  • Enough space to accommodate distribution, fulfillment, returns, and liquidations.

The changing tale of retail

Once upon a time, mail order catalog shopping was considered revolutionary. It’s how some retailers, like Sears, made their name. The e-commerce retail wave is the latest in the ever-changing, always-competitive marketplace.

As a result, the in-person retail experience is morphing into something else. Many stores have streamlined their stock, choosing to offer much more online. The physical world is becoming an extension of the online world, rather than the other way around.

Sadly, it also means that some retailers – many of them anchor stores in shopping malls – have had to close locations or shut down completely. Towns and cities across the country now have ghost malls and vacant parking garages – but these too can be repurposed into e-commerce facilities. They already fulfill what logistics managers require: large spaces, high ceilings, and close proximity to population areas.

The vision for South Florida

South Florida is in a unique position in terms of e-commerce distribution. Sitting at the tip of the Florida peninsula, the area is a perfect location for delivering goods purchased online to local communities and international ones. Smart investors are capitalizing on this reality, and we can help them do it.

Since 1976, Morris Southeast Group has seen CRE’s peaks and valleys. We are especially excited about the opportunities e-commerce can bring to the local commercial market. Our team of South Florida professionals can help you find the right building for the right job, in the right location.

For a free consultation, call Morris Southeast Group at 954.474.1776. You can also reach Ken Morris directly at 954.240.4400 or via email at kenmorris@morrissegroup.com.

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