May 31, 2018 Three Trends Modernizing Industrial Real Estate
According to an NREI report, sales of industrial properties rose 3% between 2016 and 2017, while industrial real estate investments increased a significant 23.2%. BisNow explains that the recent increase in activity can be attributed to three major trends in the market: Distribution and Logistics, Fast and Fresh, and Heightened Attention to Broker-Client Relationships.
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Distribution and Logistics:
The birth of e-commerce significantly altered decision-making factors for companies looking to lease industrial space. Prior to the rise in e-commerce business, companies sought out well-located properties for the lowest possible rent. E-commerce shifted the consumer consumption patterns to revolve around quick delivery and convenience, specifically the demand for same-day and next-delivery. This shift has forced companies to refocus their delivery strategies, which may mean choosing location over price.
Fast and Fresh:
Consumer demand is at an all-time high for meal-kit delivery companies like Blue Apron and Hello Fresh. Companies like these heavily rely on fast delivery to satisfy the customer’s expectation they will receive fresh food, and proximity to customers and distribution channels is a key consideration for these company’s real estate decisions. Hello Fresh’s strategic decision to located their operations in New York puts them in easy delivery distance of their customer base, and Amazon has recently acquired cold storage warehouses near Dallas, Chicago, and New York City.
Heightened Attention to Broker-Client Relationships:
Lastly, BisNow notes that brokers must increasingly focus on the specific needs of their clients. Different companies desire varying locations, square footage, and proximity to transit, and it is essential that broker’s focus on attaining a strong relationship with his or her client base.
These three key factors are expected to drive industrial real estate trends as long as e-commerce businesses are on the rise.
Read the full article at www.bisnow.com