As the death of malls, departments stores, and other retail businesses looms, the industrial market begins to strengthen day by day. With consumer consumption increasing and retail declining, products still have to be manufactured and distributed. The retail decline is essentially cutting out one more stop in the distribution chain, making products more affordable and putting the manufacturing, distribution, and sales process solely on the industrial market’s back.
Why is this real estate revolution happening? E-commerce, social media marketing, yelp, etc. Ten years ago Barnes and Noble was the place to buy books. Today Amazon is the place to buy books. Here are my predictions for the next ten years……..
E-commerce will lead to more stores in industrial business parks that will never even see a customer. For example, I just leased a space in an industrial business park to a company that distributes health products. Their sales are generated 100% online through social media and they can cut their costs by paying half as much for an industrial suite as a retail location.
Prices for products will decline as businesses cut out the middle man (retail) and go straight to the consumer through amazon, social media, google, etc.
Industrial rental rates will rise as demand for retail shifts into the industrial market.
Industrial real estate investors' profits will grow.
Take out will locations will become more prevalent and will no longer need the retail exposure. Take out venues similar to Sauce, Pei Wei, etc will move into less expensive locations in business parks that are away from the beaten path. Consumers will be in in touch with these off the beaten path take out spots through yelp and social media.
By: Max Fisher, Industrial Properties Broker. Cushman & Wakefield | PICOR
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Max Fisher, Industrial Properties Broker