Retail trends have had a huge impact on the industrial market for the last few years. Amazon shifted the entire e-commerce industry to lightning-fast shipping, which means that industrial centers and warehouses are being moved to closer-to-the-city locations to handle the load.
On top of that, the trend toward reduced store size means that there’s more need for off-site storage and warehousing for retail products than ever before. Here are three other ways that the industrial market is being impacted by retail.
Industrial Market Impact #1: Massive Closures of Big Retailers
Brick-and-mortar retail overall is preparing for massive closures due to bankruptcy over the next year, largely because of Amazon, but also other online retailers. These closures are both haunting and inspiring for the industrial market. Those holding leases for big box stores are preparing for huge hits. Those investing in these shuttering retail stores have big new innovative ideas for how to reuse these spaces.
Industrial Market Impact #2: Rethinking Industrial Space Use
The vacancy rate for industrial space hit a low point last year with a basis point drop of 70 points to 5.6%; lower than the record low hit in 2000. Those vacancies may not last long as industrial leaseholders and investors seek to find new uses for spaces now housed by failing retail giants.
Again, e-commerce is the driver behind this trend sweeping through the industrial market; the rethinking of industrial space use. Some old shuttered storefronts make excellent fulfillment and distribution centers that are located closer to city centers. They are now being converted to handle last-minute-mile issues for new online retailers to aid in faster on-time delivery.
Industrial Market Impact #3: Global Consumption Increases due to E-Commerce
U.S. retailers aren’t the only ones feeling the effects of retail on the industrial market. E-commerce has also increased global consumption and is expected to account for at least 30% of the global economy over the next several years. Products once cost prohibitive for people living in the Far East are now as easy to order online as they are in the U.S.
That has helped to expand the global reach of online retailers beyond U.S. borders. With that, the need for more physical space to house all of the goods needed to accommodate the growing global demand for faster delivery has made once abandoned industrial spaces more attractive.
Learn More About Us!
The Eberhardt & Barry firm has been serving the Central Georgia region and beyond since 1970, providing unmatched expertise in commercial real estate sales, leasing, site-selection, property management, commercial real estate development, tax appeals, receivership and foreclosure, investment consulting, and broker opinion of value. The firm joined the Coldwell Banker Commercial brand in 2004 and has since become Georgia’s leading Coldwell Banker Commercial office in gross sales.