eCommerce Continues to Drive Strong Industrial Market

Posted on February 2, 2019

The need for industrial properties will continue to increase as more and more companies begin to understand the importance of eCommerce. Not only will the growth of online businesses require additional space, but brick-and-mortar retailers who are rethinking their strategies to incorporate an omni-channel approach are going to be searching for more warehousing space.

With traditional retailers adapting to the digital era, we’re seeing more retailers shifting store layouts and size as well as turning to digital marketing to compete with their eCommerce counterparts. Online sales are growing at an increasingly fast pace with eCommerce sales accounting for 9% of all US retail sales, calling for strong industrial real estate backup.

Today’s consumers are expecting quicker delivery times, forcing retailers to need industrial spaces in densely populated areas. Retailers are not just searching for locations closer to their customers, but also to available labor forces. As a result, industrial “last mile” spaces will be in high demand in the coming years to accommodate the growing supply chain and logistics needs of retailers. As the increasing cost of construction continues to limit the ease of new developments, “last mile” facilities will create a number of opportunities for urban markets to welcome redevelopment and allow retailers to be in close proximity to a wide array of consumers.

Competition for these facilities will be fierce as vacancy rates hit a historic low. At the end of 2018, industrial property vacancies came in at 4.3%. It’s safe to say that the going rate for these industrial spaces may reach a record high in the coming year following heightened demand. Only time will tell. To learn more about the growth of industrial buildings near urban areas, reach out to speak to one of our experts.