While news stories like the rise and decline of WeWork or the retail realignment might cause observers to assume that the industrial world has been stable or even stagnant in comparison, the reality couldn’t be farther from the truth. Many of the same factors that have influenced the broader real estate world, alongside some unique ones, are causing similar systemic changes to the industrial market.
The world of industrial real estate is highly exposed to traditional economic forces. Driven mostly by consumption, industrial is heavily impacted by consumer demand, unemployment rates and international trade policies. While commentators are currently concerned about the ongoing U.S.-China trade war as well as the in-progress novel coronavirus, the most recent specific cause for growth in industrial real estate can be traced back to the expansion of the Panama Canal in 2016. Now large enough to bring through ships twice the previous size limit, the United States is presented with new opportunities and challenges in storage and supply chain management along both coasts. Breaking from traditional logistic patterns, goods are arriving in new locations and need places to stay that did not before exist.
More than any other type of industrial property, warehouse space can be seen as the clearest example of a market in transition. In addition to all the traditional economic factors, this market is uniquely influenced by the shifting demands coming out of the real estate world, and in particular the increased global emphasis on eCommerce. This new type of selling continues to grow and as the retail industry experiments to find the best combination of brick and mortar shops, referred to as omni-retail, and delivery options including pick up points for online orders, the industrial real estate market must also evolve to support these initiatives. Once again, location is king.
This report takes a deep dive into the current trends and technologies impacting the warehouse market. Through in-depth research and interviews with top industry experts, including people at Amazon, we move forward to survey the responses being undertaken by the warehouse industry in order to not only future-proof but set up for profitability well into the tech-enabled future. By providing not only a clear understanding of the warehouse business in 2020 but also an exploration of several notable case studies from operators like Amazon, Prologis and others, this report provides insights into the challenges and proposed solutions of last-mile delivery, the growth of fulfillment centers and how tech trends like robotics, drones and AI will mold the future.
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Before diving into the changing nature of industrial real estate, it’s important to point out the fundamental demand drivers for warehouse space. Since these properties are…