E-commerce has taken the commercial real estate industry by storm, leaving a profound impact. With the e-commerce industry predicted to grow even further, it's important for commercial real estate players like sellers, buyers, and brokers to stay on top of their game. Here, we'll explore 10 ways in which e-commerce is changing the commercial real estate landscape.
1. Increased Demand for Industrial Space
E-commerce companies require significant warehouse and distribution space to store and ship their products. This has resulted in an increased demand for industrial space, including fulfillment centers, distribution centers, and warehouses.
2. Shift in Retail Real Estate
As more consumers opt for online shopping, traditional brick-and-mortar retail spaces have experienced a decline in demand. As a result, retail real estate owners and developers are rethinking how they use these spaces, including converting retail space to industrial space.
3. Need for Last-Mile Delivery Facilities
E-commerce companies must deliver products to their customers quickly and efficiently. Delivery facilities are typically located closer to urban centers and residential areas to accomplish last-mile delivery. This has increased the demand for commercial real estate in these areas.
4. Increased Demand for Technology Infrastructure
E-commerce relies heavily on technology to manage and operate businesses. This has led to an increased demand for data centers and other technology infrastructures, which are critical to the success of e-commerce companies.
5. Competition for Prime Real Estate
As e-commerce companies continue to grow, they increasingly compete for prime real estate in urban centers and other desirable locations. This has driven up prices and made securing these locations more difficult for other types of businesses.
6. Changes in Supply Chain Management
E-commerce has fundamentally changed how goods are manufactured, distributed, and delivered. As a result, commercial real estate owners and developers are adapting to new supply chain models, including locating facilities closer to suppliers and transportation hubs.
7. Increased Need for Flexibility
The rapid growth of e-commerce has led to greater flexibility in commercial real estate. E-commerce companies require spaces that can be quickly reconfigured to meet changing demand, leading to an increased demand for flexible lease structures and spaces that can be easily customized.
8. Rise of Alternative Delivery Methods
The growth of e-commerce has led to the rise of alternative delivery methods, including drone and autonomous vehicle delivery. This in turn has led to new demand for commercial real estate facilities that can accommodate these new delivery methods.
9. Impact on Labor Markets
E-commerce companies require large amounts of labor to manage and operate their facilities. This has led to new demand for commercial real estate facilities near areas with a large pool of potential workers.
10. Opportunities for New Business Models
The rise of e-commerce has created opportunities for new business models, including online marketplaces, subscription services, and direct-to-consumer brands. Consequently, there is now demand for commercial real estate facilities supporting these new business models.
If you're in the commercial real estate industry, adapting to the requirements of the e-commerce industry can give you a major boost. To get the most out of this opportunity, it's essential to have a solid understanding of the specific requirements and needs of e-commerce businesses. This way, you can make sure you're providing the kind of real estate solutions that e-commerce companies are looking for, and reap the maximum benefits.
About the Author:
Veena Jetti is the founding partner of Vive Funds, a unique commercial real estate firm that specializes in curating conservative opportunities for investors.
Disclaimer: The views and opinions expressed in this blog post are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action.