Financial Solutions, Business Banking

Rethinking Your Facilities Strategy

Real Estate in an E-commerce World

The boom in e-commerce, accelerated by the pandemic, is having a profound impact on the commercial real estate market.

Key property trends driven by the shift to online shopping include:

  • A dramatic rise in the demand for, and prices of, industrial and warehouse space.1 Distribution centers are critical to the timely fulfillment of e-commerce transactions. As online orders rise, so does the need for warehouse space. This includes not just the traditional large distribution centers, which might take up a million square feet or more, but also the smaller, final-mile facilities that make next-day shipping feasible.
  • A movement towards repurposing traditional retail space.2 Malls, which have suffered from significantly reduced foot traffic, are being re-developed into mixed-use properties that may include residential and office space, but also fulfillment centers. Retail spaces themselves are also being redesigned to support Buy Online, Pick-up in Store (BOPIS) by further limiting showroom space and increasing warehousing capacity.
  • The conversion of office space to storage space. With home and hybrid work on the rise, the demand for traditional office space has declined, leading some developers to begin exploring repurposing these facilities to serve the needs of e-commerce distribution.

These trends are causing commercial property tenants and owners to rethink their real estate needs and adjust their real estate strategies to better meet the unique demands of omnichannel distribution.

For traditional retailers, this may mean retooling storefronts to act as both showrooms and online fulfillment centers. For developers, it means identifying the core needs of an e-commerce-driven distribution system and building to suit those needs, from new, “smart” retail outlets to pared down, hyper-local distribution centers.

As your business weighs its real estate strategy, we are here to help with the necessary resources to ensure that your facilities meet the demands of the new digital economy.

1 Warehousing Giants are Consolidating in a Shifting Real-Estate Market, The Wall Street Journal, June 13, 2022.

2 19 Commercial Real Estate & Technology Trends to Know [2022], Dealpath, March 8, 2022.

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