Warehouses Are Where It’s At: A Boom In Industrial Buildings

Industrial real estate is booming – why?

According to Urban Land Magazine, the boom of e-commerce is causing a growth in industrial real estate that shows no signs of waning.

Warehouse vacancy rates remain at all-time lows, rents are at record highs, and new construction continues to rapidly increase. Due to a shift in the market, Amazon and other online retailers are looking to move closer to their customers and shorten delivery times for their products. “What’s actually happening is e-commerce over the past 17 years has switched to competing on price to competing on convenience,” says Rene Circ, a moderator from a recent discussion panel of industrial property managers.

At roughly 600 million square feet and representing a mere 4 percent of the total industry, e-commerce is still a quite small part of the overall warehouse market. But in terms of new demand, it is the primary driver.

While retailers continue to close down brick-and-mortar stores nationwide, it hasn’t had a dramatic effect on warehouse space. For example, Macy’s recently announced that it was closing dozens of stores in the United States, but they only shut down a single 200,000 sf warehouse.

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