The retail and industrial sectors have always been partners in producing goods and delivering them to consumers. But as e-commerce continues to grow explosively and consumers increasingly demand “omnichannel” retail experiences, the two industries are becoming more intertwined than ever.
This convergence is creating significant real estate implications. A recent Colliers report found that development, absorption and rental rate increases in the big-box industrial space are all directly correlated to e-commerce demand.
In the latest issue of Knowledge Leader, global real estate investment management firm Heitman also explores key shifts occurring as retail and industrial find more common ground. Some of their findings might surprise you. For example, did you know that large retailers need three times the amount of warehouse space to support the same level of online sales compared to sales through traditional stores?
As technology continues to transform consumer preferences and expectations, retail is integrating into the supply chain, blurring the lines between where a retailer ends and a logistics company begins. At the same time, it’s becoming more important than ever that bricks-and-mortar stores be well-located and offer a compelling experience that can’t be replicated online.
While some traditional bricks-and-mortar stores are struggling, the need for warehouse space is only expected to grow. Requirements related to e-commerce now account for as much as 25 percent of all industrial leasing activity and 45 percent of new tenant requirements for spaces 200,000 square feet and larger.
As more retailers recognize that omnichannel capabilities will be crucial to long-term survival, the continued growth of e-commerce and a broader focus on supply-chain optimization are likely to boost industrial demand for a long time to come.
To learn more about the implications of retail and industrial continuing to converge, download the Fall 2016 Knowledge Leader magazine.