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3 Ways the Industrial Market is Being Impacted by Retail

December 18, 2018 by Perry Leave a Comment

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 3 other ways that the industrial market is being impacted by retail.

#1: Massive Closures of Big Retailers

Everything that you could buy at places like Sears, Kohl’s, and JC Penney can be ordered online at Amazon for less and with front door delivery. Because of that, retail giants are seeing massive closures. This year alone, Sears is closing 150 of its stores, JC Penney is planning to close 140 stores, and Macy’s is closing 100 stores but they’re not the only ones.

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.

#2: Rethinking of 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.

#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.

Some of the top players in the global market demanding more supply from U.S. online retailers are China, Brazil, and Mexico. Expect the reach of global goods from online retailers in the U.S. to expand to other parts of the world, thus further increasing the appetite for more industrial space.

 

Written by Nicole Brzyski for Coldwell Banker Commercial Affiliates

Filed Under: Commercial Real Estate, Industrial Real Estate, News, Statistical Blurb, Uncategorized Tagged With: #educational/vocational, #gainesville commercial real estate, #manufacturing jobs, art #retail sales., Gainesville Manufacturing, Industrial and Technology, industrial real estate

4 Not-So-Obvious Reasons Why Warehouses are Hot Investments Right Now

December 13, 2018 by Perry Leave a Comment

21 Mar 2018

4 Not-So-Obvious Reasons Why Warehouses are Hot Investments Right Now

Vacancy rates are at all time lows. Absorption rates are at their highest and the “industrial sector has outperformed all other property types with double-digit total returns” according to the Integra Realty Resources 25th annual Viewpoint report covering the commercial real estate industry.

The obvious reason behind this surge in investor excitement about warehouses is the growth of e-commerce, but that’s not the only reason. Here are 4 not-so-obvious reasons why warehouses are hot investments right now.

#1: Asian Investors Spark Multi-Story Warehouse Trend

In China and Japan, investors have been producing multi-story warehouses for the last few years to support global and national logistics. The ability to load multiple trucks through the same warehouse and out the door is only now being tested in Seattle and San Francisco. Investors excited about the possibilities for last mile deliveries using multi-story warehousing is heating up interest.

#2: Businesses Compete for Logistical Space

Speaking of logistics – the international term for industrial warehousing – is creating new competition in secondary CRE markets. Demand for these assets is outpacing retail and office, and it is the CRE sector in highest demand worldwide. With cap rates as low as they are, secondary markets are proving to be viable options now that primary asset prices are on the rise, all in an effort to move goods and products faster.

#3: Foreign Investors Eye ECommerce-Ready Industrial Warehouses

U.S. investors only started eyeing industrial warehouse assets en masse a few years ago. Now foreign investors are getting in on the act, foregoing investments in status symbol sky rise buildings and offices and instead are looking to capitalize on e-commerce-ready warehouses; those most strategically placed for e-commerce as well as those equipped to process online orders rapidly and efficiently. Competition is coming from Asia but also countries like Canada and Germany are looking to invest in U.S. warehouse space.

#4: Fast Closes, Low Debt Assets Attract More Investors

According to one major investor, up to 70% of transactions involving industrial warehouses are cash deals. Cash deals close fastest and carry less debt. With all of the competition driving demand, buyers are using cash to get a leg up on competing bids. Unlike office and retail space where investors finance a large chunk of the costs over the long term, all cash deals are more attractive to investors who look for faster closes and are willing to take on less debt. Warehouses are providing that avenue for investments and investors of all types are seizing on it.

Filed Under: Commercial Real Estate, Industrial Real Estate, Updates Tagged With: #manufacturing jobs, industrial real estate news

Fourth Year Success in Florida’s Manufacturing Jobs

June 22, 2017 by Perry Leave a Comment

A few years after the recession, States across the nation are seeing building progress with jobs, real estate, and all around business growth. In Florida the past four years have opened jobs in so many varieties; especially in aerospace and electronics. Take a look into this article detailing how the past four years and up to today, how Florida has grown and recovered in their manufacturing jobs.

https://mni.net/news/story/florida-gained-manufacturing-jobs-for-a-fourth-straight-year

Filed Under: Uncategorized Tagged With: #bigbuildings, #commercial properties, #manufacturing jobs, industrial real estate, industrial real estate news

Coldwell Banker M.M. Parrish
Coldwell Banker M. M. Parrish Realtors

352.665.9731
ppursell@mmparrish.com

5808 NW 39th Ave
Gainesville, FL 32606

5110 SW 91st Drive
Gainesville, FL 32608