Click-to-Collect and E-Commerce: A Windfall for CRE
Pivoting from in-store sales to tech-enabled sales was one of the saving graces of retail in 2020 when stores emptied out, and shelter-at-home orders dragged one. The data now shows that companies and markets better positioned to shift to e-commerce fared better than those that didn’t.
The upside to shifting sales online, though, was that it contributed to a longer holiday shopping season, and drove record-breaking extension in e-commerce market penetration, with some reporting as much as 70% e-commerce sales growth last year.
When a Door Closes…
On the commercial real estate (CRE) side of the retail coin, it has also driven demand for warehousing, fulfillment, and shipping spaces – a shift that creates an opportunity for a savvy agent or broker.
…A Warehouse Opens
The World Property Journal, for example, reports that 99.2 million square footage of industrial space was taken up in the last quarter of 2020, making it the strongest quarter on record. Some 203.7 million square feet were absorbed during the course of the year, which is 27% up on 2019’s net growth.
This overview perspective echoes the reports coming from regional data, such as in Wisconsin, as well as abroad in the UK and Europe, and Australia. According to Bizjournals.com, in Southeast Wisconsin, the industrial property market in 2020 took up square footage equal to that of all the new builds coming to construction completion in the area.
In the UK, FM Magazine reports, that available space is outpaced by demand, and this is tricky at a time when companies will have to manage their supply chain very carefully due to Covid-19 and ‘Brexit’.
This kind of growth is a beacon of light in the otherwise dismal statistics of 2020, where economies around the world took huge strain – but it also draws attention to itself, which means more competition too.
“The most common critical factors that determine the marketability of industrial space continue to be location, clear height, loading access and truck and auto parking,” says NAI Koella | RM Moore Senior Advisor, Sam Tate, CCIM. Tate continues “these are of primary concern to most all industrial users. Beyond that there are secondary factors which may be critical to some industrial applications, but may be seen as conveniences to others. These would include type of lighting, type of sprinkler system, dock levelers and seals, yard area, climate control, office space and utility capacities, among others. If your industrial space has a check mark beside the critical factors, you have a high probability of finding a buyer or tenant quickly in the current market. Adding some of the secondary factors to that checklist further insures a fast turnaround time period. However, if you also have many of the secondary factors, but are not strong on the critical factors, you may have an extended lead time in finding your next user, even in this market.”
At this point, analysts generally expect this trend to continue into the second quarter of 2021, although the growth line may flatten out somewhat as we begin to see a stronger return to in-person shopping in Q3 2021.