E-Commerce’s True Impact on Real Estate

E-Commerce’s True Impact on Real Estate

WASHINGTON, D.C. – February 2, 2015 – (RealEstateRama) — GlobeSt.com caught up with NAIOP president Thomas Bisacquino to talk more about how e-commerce is influencing real estate decisions from a location perspective and the emerging trends he sees on the retail front in part two of an exclusive interview.

GlobeSt.com: What are some of the topics you’ll be discussing, specifically?

Bisacquino: E.CON packs a lot of information into a day and a half meeting. We have a terrific session that looks into what institutional investors must analyze: a building’s reusability and sustainability, capital requirements, future rental rates. We’ll talk about key drivers for site and building selection with a panel e-commerce leads from major brokerage houses like JLL, CBRE, and Cushman & Wakefield. If you build it, will they come? We’ll discuss bigger footprints, taller ceiling heights, stronger slabs and foundation and location, location, location—all key to speculative developers. Not all e-commerce retailers are Amazons—plenty of small- and medium-size companies have growing online sales, so we’ll talk about shared e-commerce campuses for multiple uses and the role of third-party logistics providers. Finally, no e-commerce conversation is complete without envisioning how to shorten that last mile, including the best use of drones and driverless vehicles.

GlobeSt.com: How is e-commerce influencing real estate decisions from a location perspective?

Bisacquino: With e-commerce, customers increasingly expect not just endless choice, but also instant gratification. E-commerce giants like Amazon have more than 35 fulfillment locations and can reach more than 90% of consumers with one-day ground shipping.

By contrast, just 11% of the population can be reached, with the same type of shipping, by an average retailer with just two optimally placed fulfillment centers. That leaves a lot of room for growth—and a lot of opportunity for commercial real estate.

GlobeSt.com: What emerging trends do you see with regard to the impact of e-commerce on industrial?

Bisacquino: Industrial real estate is shifting from traditional distribution (warehouse to store) to greater fulfillment centers (warehouse direct to consumer). There’s a change for retail too.

Merchants like Walmart are not only expanding their distribution and fulfillment networks, but they’re using actual retail locations to satisfy online orders. Think about it: Walmart has 4,200 stores within five miles of two-thirds of the US population. They announced earlier this year that more than 20% of online sales are now shipped two-day from a store. It’s significantly lowered their delivery costs and times.

Read the full interview on GlobeSt.com (login may be required). See part one of the interview.

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