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Trends in Ecommerce Affecting the Real Estate Market

by Robert Hartley on 2016-07-29 13:11:33

To start the 2016 year, empty warehouses were increasingly hard to find in each market. CBRE recently reported that warehouse space availability fell 23 consecutive quarters. Just in Salt Lake City, UT alone, from 2015 to 2016, the warehouse space availability is down 16.5%. The trend for low warehouse availability is due to the demand in ecommerce operations. This is fueling the high demand for operations and warehouses in populated regions, along with the increase for new warehouses to be built.Warehouse_Real_Estate.jpg

Because of the rapid growth of ecommerce, online sales is the largest contributor to this real estate market. Online shopping is expected to rise 46% in 2016, according to Smart Insights. This will coincide with e-tail sales increasing approximately 5-6%. IDS touched on this recently in a blog by IDS VP of Sales, Mike DeFabis about “The Amazon Effect”. Amazon and other online retailers are the main reason for this explosion of growth in online sales and customers pushing to receive their goods quicker. This trend is affecting the real estate market with warehouse providers looking for small to mid square footage facilities in multiple locations. The real estate market is seeing the largest increase in the multitenant warehouse segments where providers are looking for 200,000 or less square foot facilities. In Utah, 2.9 million sq ft of industrial space was added in 2015 with an additional 1.6 million sq ft under construction. This trend will continue as ecommerce sales increase and the demand for shorter transit times grows.

The best response to the need for smaller distribution locations, but getting closer to the US population, is working with a 3PL warehouse provider. A 3PL like IDS will be able to provide you space within a multi-tenant order fulfillment center strategically located to cut down on transit time to customers without the overall expense of running the operation yourself.

For more information on how IDS can help with a solution for your ecommerce fulfillment needs, contact us today!

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