June 3, 2016
“Industrial” once meant “manufacturing.” But, today, “industrial” includes distribution and warehouses. And according to Green Street Advisors analyst Eric Frankel, e-commerce means higher demand for such buildings.
During “The Secular Shift in Industrial Real Estate” webinar on June 2, Frankel pointed out that, while many retailers are decreasing inventory because of better supply-chain management, “retailers with fast-growing e-commerce platforms tend to have greater inventory.”
As such, bulk industrial and regional distribution product are appealing, especially if they’re close to rooftops. “More warehouses for retail are being built closer to population centers, so they can cut down on delivery time or cost,” Frankel said.
Green Street forecasts higher rents, with demand meeting supply during the next five years. “If we’re going to use a baseball metaphor, we can say that industrial fundamentals are in the sixth inning, but had to repeat several times because of fairly strong e-commerce demand,” Frankel said.