Investors sometimes overlook the opportunities available in the commercial real estate industrial space market.
E-commerce Is Big
E-commerce is making a major impact on the industrial market space. While many locales are focused on retail, mixed-use-development, and transit, they are overlooking e-commerce and its benefits. A recent NAIOP article by Ron Derven and Margarita Foster note:
“The city of Ontario recently rezoned 200 acres of land just north of the airport [for industrial use],” Mike McCrary [managing director, industrial services, JLL] added. “With a stroke of the pen, QVC signed a lease on a 1 million-square-foot building there. From the sales generated at the building, the city will get about $5 million in tax revenue.” He stressed that the industrial building increases the tax base for the city without appreciably adding to the cost of police and fire protection.
A Shift Back to Manufacturing
Due to advancing technology, new opportunities are emerging in manufacturing, and this will affect industrial space:
The advent of the 3-D printer will shift the current emphasis on distribution back to manufacturing, predicted Gregory Healy, executive managing director, supply chain and logistics, Colliers International. He predicted that consumers will soon be able to order products that will be manufactured locally on a 3-D printer and then delivered to their doors, which will reduce inventories and speed delivery, much as e-commerce has done.
More Trends
Geographical trends are also affecting industrial space. Population and job growth are shifting to areas with good weather. Areas dealing with more space constraints are shifting to multistory warehouses, particularly on relatively expensive infill sites.
Another growing trend is toward hybrid distribution/fulfillment centers that deliver to consumers but also deliver inventory to stores.
Understanding what is impacting the industrial sector is key to successful investment. Robert Poe MBA CCIM is the designated broker/owner of Royal Commercial Real Estate LLC. He has advised clients on acquisitions and dispositions of commercial real estate with the goal of increasing their wealth and minimizing tax liability for over 25 years.
You can reach Robert at 480-253-9431 or rpoe@royalcre.com.
Leave a Reply