TRENDING: INCREASED DEMANDS ON WAREHOUSE SPACE
For the modest warehouse, this is the time to shine!
Bland, unadorned, overlooked and often taken for granted, these properties are suddenly in hot demand in many parts of the country, thanks in part to a rise in e-commerce as consumer shopping habits move online.
Large warehouses are typically used by businesses such as manufacturers, wholesale distributors, transportation companies, and big retailers. But the growth of e-commerce services such as Amazon has led to increased demand for warehouse space and other types of industrial real estate.
The demand for e-commerce services has had a significant impact on real estate prices, which helps explain warehouse space demand increasing and the need for suitable industrial land. Another reason behind soaring warehouse rents is the fact that e-commerce operations usually require three times more space than a traditional brick-and-mortar retailer would need.
In a trend largely stemming from the growth of e-commerce players across the U.S., some plots of land now cost twice the amount they did a year ago. This is especially true in major markets, including Atlanta and Houston.
AS reported by Realtor Magazine, the largest parcels of industrial land now sell for around $100,000 per acre, twice as much as they did a year ago. For smaller, more numerous industrial plots close to metropolitan areas, prices have risen by $50,000 in the last year to an average of $250,000 per acre.
That poses a potential threat for small businesses that must compete with bigger and wealthier bidders for a dwindling supply of square footage, particularly if they aren’t in the e-commerce industry themselves. On the flip side, this boom in demand could present an opportunity for the same small businesses that have extra space they could lease or sell.
Warehouses often reveal little about what goes on within their walls, but the buildings make possible the rapid delivery that consumers now expect from online retailers. They serve as storage and distribution points for products ranging from auto parts to pharmaceuticals. And warehouse jobs have grown rapidly since 2010, forming a critical part of the employment base in communities across the country.
One challenge for many builders is finding development sites in or close to dense, built-up cities, where land is often scarce. E-commerce companies need such parcels to guarantee they can quickly dispatch orders to homes and businesses.
As developers try to catch up, they are considering some unusual solutions, like constructing multi-story warehouses and demolishing struggling malls to make way for sprawling industrial properties. But only time can tell if these efforts can meet with the demands of the people in the coming years.
About the writer: Shaura Cuyan writes about all the hottest Real Estate trends and predictions for Summit VA Solutions! She has previously written for a number of freelancing gigs and writes her own blog on lifestyle and current issues. She is a Graduate of Bachelor of Arts in Communication, taking up her Masters in Development Communication.