5 Ways E-commerce Has Changed the Game for Industrial Real Estate

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E-commerce has been a crucial driver in the industrial real estate market for both leasing and investment activity. This new niche market of retail is transforming the entire industrial sector from logistics to warehouse design. Let’s take a look at a few ways e-commerce has changed the game for industrial real estate.

Logistics

The logistics part of the industrial sector is on fire, primarily because of e-commerce. The requirements behind logistics facilities for e-commerce are very different than for in-store retail. As e-commerce grows, retailers will need to expand their logistics space for a variety of reasons:

  • Need to stock a wider variety of SKUs
  • Need more space for processing returned items
  • Need to have more buffer stock on hand
  • Need more space due to individual order picking, packing and shipping directly to the consumer

Facility Locations

One of the biggest differences with e-commerce warehouses and distribution centers are where they are located. In-store distribution vs. e-commerce fulfillment means shipping cases or products vs. shipping a necklace, toilet paper and a pair of shoes directly to a customer. When you do the distribution to stores, you need a location that is semi-rural where land is less expensive and there is plenty of space, but with fulfillment, the opposite is needed. You need to be close to the consumer for quick delivery times.

Different Process

When you are choosing boxes to be delivered to a retail store, the level of automation is low, but when you are choosing specific items to send to a consumer, the automation must increase and requires three times as much space. Fulfillment requires a different location, operation and size than distribution requires. As e-commerce continues to boom, this will affect the number of fulfillment centers vs. distribution centers.

Developers Need to Position Themselves for the Future of E-Commerce

New centers will require bigger buildings, which means developers will need to change the way they approach industrial real estate development. Developers will need to get out in front of it because many companies are underestimating the amount of space they will need for e-commerce operations. Spec buildings will increase in demand due to the growth of e-commerce. Because so much space will be needed to meet the demand for e-commerce facilities, developers who have the buildings will ultimately win the game and will be taking on little risk, because there will always be a demand.

More Fulfillment, Less Distribution

Real estate experts project e-commerce will have double-digit growth every year, which will result in more fulfillment and fewer distribution centers. Consumers are going to purchase more via their mobile devices than they will on their computer and these purchases won’t be lengthy ones, but rather one or two item type transactions. These quick one or two item purchases will affect labor since the labor to pick four one-line-item orders is much more than the labor to pick one four-line-item order. With more labor in demand, more space and resources will be required.

How is Virtual Reality REALLY Going to Impact CRE

Male and Female Architects Wearing  Augmented Reality Headsets Work with 3D City Model. High Tech Office Professional People Use Virtual Reality Modeling Software Application.

Male and Female Architects Wearing Augmented Reality Headsets Work with 3D City Model.

Virtual reality (“VR”) will create opportunities for everyone. In an excellent article on the topic by The Counselors of Real Estate (read it here), they explain how the use of virtual reality could change every aspect of deal making.

“One of the main uses of VR for real estate is marketing. While the cost of a virtual model may seem high to some, the cost can be offset through the reduction of other marketing spend, a reduction of holding costs by compressing the transaction cycle and accelerating cash flow, which also reduces the risk of closing. The model can also be repurposed for use in facilities, asset and property management. A VR model can save time and money in terms of making design decisions more quickly and avoiding mistakes during the build out of a space. Similarly, VR models can be used to facilitate and make planning meetings or economic development agency initiatives more accessible and efficient by putting models online to help make real-time changes, by any or all of the stakeholders.”

“Transaction friction can also be reduced, as potential buyers or tenants can “see” a range of properties without having to travel to each location. Imagine the productivity gains over the course of a year from being able to see ten properties without leaving one’s office in the time it would take to drive to and from just one property. The use of a VR model can also expand the market for buyers, as the entire globe is now able to see the property. Brokers are able to measure reaction in real-time via embedded audio and video capabilities. This also makes brokers more efficient, as they do not need to coordinate logistics for and host extensive property tours that undoubtedly will include properties that are not given any consideration by the client.”

Let’s take a deeper look at how VR is going to impact CRE.

You’ll be able to visualize developments and properties in completely new ways.

We’ve seen this concept commercially with Lowe’s VR design service, where a customer can see the color of paint in a room before they commit to it. “Developers will be able to complete showroom experience to local and remote clients that allows them to select their own finishes, furnishings and other amenities — before groundbreaking.

Buyers/tenants can instantly see themselves in the space the way they want it, creating the opportunity to shorten sales cycles and sellout periods as well as reduce holding costs,” explains an article by The Counselors of Real Estate. One of the most profound ways they list that leasing brokers and owners will be able to “use VR tools to complete test fits of spaces for potential tenants in real-time, online or on site, without the need to wait for an architect.” Property and asset management can utilize VR for  property and space availabilities, occupancies, maintenance requests or records.

Virtual Reality expedites stakeholders’ decision-making.

An article for Bisnowexplains that “one of the biggest benefits of VR technology is that it enables owners, brokers and tenants to envision a potential master plan, building or interior space quicker and easier than ever before; the immersive experiences allow critical team members to make quick decisions and get the project moving.”

In the article, GA director of virtual design and construction Michael Schroeder says that “with the VR technology, I can engage all the important stakeholders in the process on their own schedule.”

“The technology allows the process to move forward at a quicker pace, enabling crucial decisions to get the consensus response they need. It’s a vital step in saving time for all parties involved.”

Virtual reality allows everyone to be in one place at once.

In CREtech’s articleabout ways virtual reality is changing commercial real estate, they explain that “as foreign investments in U.S. properties continue to increase, being able to make deals remotely is imperative. VR technology allows brokers and agents to show a space to potential clients on the other side of the globe in real-time and as if they are actually walking through the space. Showings are no longer limited by space and time which is resulting in a limitless global base of potential clients.

New Listing – 15 acres of land along Rt. 61 in Ontelaunee Township

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Bryan Cole and John Buccinno of NAI Keystone Commercial and Industrial have been retained to exclusively represent Greater Berks Development Fund (GBDF), an affiliate of the Greater Reading Chamber Alliance, in the Sale or Lease of approximately 15 acres of land along Rt. 61 in Ontelaunee Township.

GBDF purchased the land, which was originally 22 Acres and is in the process of subdividing 7 acres which will be sold to an End User.  The remaining 15 acres is ideally suited for industrial or manufacturing users.

The concept plan shows the potential for a two-building site. The site can accommodate users from 10,000 square feet to 140,000 square feet and is located at the lighted interchange of Rt. 61 & Rt. 73 which provides easy access to I-78 and Rt. 222.

“GBDF and GRCA are committed to helping Berks County employers grow and expand their business and local workforce,” said Randy Peers, GRCA President & CEO. “Industrial and manufacturing companies play a large role in our local economy, and the availability of more sites like this one help support existing business growth as well as our business attraction efforts.”

NAI Keystone Commercial & Industrial, which maintains a prominent market share in Berks and Schuylkill Counties, Pennsylvania, specializes exclusively in commercial and industrial properties. In addition to property management and receiverships, NAI Keystone provides brokerage services such as Tenant/Landlord and Buyer/Seller representation, lease administration, commercial financing, consultation services, 1031 Tax Exchange, environmental surveys, and investment sales.

John Buccinno and Bryan Cole complete 146,324 SF lease at former VF Outlet

 

NAI Keystone’s John Buccinno and Bryan Cole have executed the lease of a 146,324 SF office space lease on 15 acres at the former VF Outlet in Wyomissing. The lease which has a total value of over $61 million was finalized the end of last year.

There is 19 acres of land remaining for build-to-suit office or flex space opportunities from 10,000 SF up to 100,000 SF. For more information on these availabilities please contact either Bryan Cole at 610.370.8502, bcole@naikeystone.com or John Buccinno at 610.370.8508, jbuccinno@naikeystone.com.

NAI Keystone Commercial & Industrial, which maintains a prominent market share in Berks and Schuylkill Counties, Pennsylvania, specializes exclusively in commercial and industrial properties. In addition to property management and receiverships, NAI Keystone provides brokerage services such as Tenant/Landlord and Buyer/Seller representation, lease administration, commercial financing, consultation services, 1031 Tax Exchange, environmental surveys, and investment sales.

Sly Fox Brewing Co. Moves into VF Outlet Center

Sly Fox

NAI Keystone is pleased to announce the completion of the lease of the former Dooney & Bourke outlet located at the former VF Outlet Center, now known as The Knitting Mills, in Wyomissing to Sly Fox Brewing Co. NAI’s John Buccinno represented the landlord, Equus Capital Partners while NAI’s Kyle McKechnie represented the tenant, Sly Fox Brewing Co.

The Pottstown-based brewing company has plans to open up a restaurant in their approximately 5,900 SF space located in the front half of the building. The restaurant’s preliminary plans state they hope to be open by late summer or early fall.

Since the inception of this revitalization project at the VF Outlet Center, and in addition to Sly Fox Brewing Co., NAI Keystone has found a home for UGI Energy Services new headquarters in the old outlet’s ‘Blue Building’ and represented Equus Capital Partners in the sale of the 20,000 SF building formerly used by Rawlings to Orthopedic Association of Reading.

NAI Keystone Commercial & Industrial, which maintains a prominent market share in Berks and Schuylkill Counties, Pennsylvania, specializes exclusively in commercial and industrial properties. In addition to property management and receiverships, NAI Keystone provides brokerage services such as Tenant/Landlord and Buyer/Seller representation, lease administration, commercial financing, consultation services, 1031 Tax Exchange, environmental surveys, and investment sales.

SOLD – 606 Court Street Reading, PA

NAI Keystone is pleased to announce that Vice President of Sales & Leasing, Kyle McKechnie, has successfully represented Baker College on the sale of 606 Court Street in downtown Reading, PA. The centrally located 26,360 SF office building was most recently used as a satellite location for the college. The property settled on Friday December 15th and was purchased by the Greater Berks Development Fund. The organization, which is an affiliate of the newly formed Greater Reading Chamber Alliance, plans to use the property for operational purposes.

NAI Keystone Commercial & Industrial, which maintains a prominent market share in Berks and Schuylkill Counties, Pennsylvania, specializes exclusively in commercial and industrial properties. In addition to property management and receiverships, NAI Keystone provides brokerage services such as Tenant/Landlord and Buyer/Seller representation, lease administration, commercial financing, consultation services, 1031 Tax Exchange, environmental surveys, and investment sales.

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Steve Willems, SIOR, Notable Transactions

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NAI Keystone’s Steve Willems has just listed 1700 Industrial Blvd. in Pottstown, PA. The 23,036 SF building was former home to Antonelli Institute for the last 31 years and will now be For Sale for $300,000. For more information on this building please contact Steve Willems at swillems@naikeystone.com or 610.370.8506.

Willems represented buyer, Highwood USA, in the purchase of 64 Conahan Drive in Hazleton, PA. The 146,000 SF building will be used to house Highwood USA’s fabrication and supply-chain units. The company extrudes synthetic materials for a multitude of uses and has its headquarters in Schuylkill County, PA

NAI Keystone Commercial & Industrial, which maintains a prominent market share in Berks and Schuylkill Counties, Pennsylvania, specializes exclusively in commercial and industrial properties. In addition to property management and receiverships, NAI Keystone provides brokerage services such as Tenant/Landlord and Buyer/Seller representation, lease administration, commercial financing, consultation services, 1031 Tax Exchange, environmental surveys, and investment sales.