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Retail, Industrial Real Estate Merge to Satisfy E-commerce Demand

Download the white paper: naiop.org/promiseofecommerce

A white paper released by the NAIOP Research Foundation (naiop.org/promiseofecommerce) says that as e-commerce sales continue their robust growth, manufacturers, transportation providers, distribution and fulfillment center operators and retailers are responding by changing the retail logistics chain.
To meet customer expectations, retailers must have merchandise on shelves for instant purchase as well as within distribution centers for direct customer delivery. Retailers must also ensure that their deliveries—both to stores and to customers—are predictable and remain cost effective.

Today’s retailers are aligning fulfillment commitments, sales and inventory tracking processes, and real estate strategies by focusing on:

  • Information Technology, for order management and payment processing.
  • Operations, for order picking and packing.
  • Site Selection, to ensure that logistics networks can support the delivery promise.

Retailers are employing alternative strategies for fulfillment that consider the delivery time frame and the lowest-cost shipping method, including using shelf inventory for local fulfillment or shipments to stores or fulfillment lockers for customer pick-up. Brick-and-mortar locations of retailers like Macy’s and Wal-Mart are using retail space for order picking, packing and shipping.

Industrial facilities are also quickly transforming to support the e-commerce boom. Today’s industrial space is specifically built to support high-volume package through-put and has higher ceilings, more deck doors, and mezzanines with greater density of floor space. Companies seek locations near major airports, waterways and ground transportation networks.

With 11.1 billion square feet of industrial space within 69 major metropolitan markets, demand for as much as 80 million additional square feet could emerge from users seeking e-commerce and mega-bulk distribution space. Parallel demand is expected for parcel hubs, delivery centers, and local, urban logistics depots that support fresh-food centers and same-day delivery services.

“For commercial real estate, the lines are blurring between industrial and retail,” said Thomas Bisacquino, NAIOP president and CEO. “Some retailers are directly developing and operating their own technology platforms, logistics and distribution facilities, and others are outsourcing all of these functions. Still others are taking a hybrid approach, keeping some tasks in house and outsourcing others. It’s fundamentally shaping the way both retailers and industrial create work spaces and workplaces.”

About the Report
The white paper, “The Promise of E-commerce: Impacts on Retail and Industrial Real Estate” was written by Curtis Spencer, president, and Steve Schellenberg, vice president, with IMS Worldwide based in Webster, Texas. It was funded and published by the NAIOP Research Foundation. The white paper is available for complimentary download at naiop.org/promiseofecommerce.

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About NAIOP: NAIOP, the Commercial Real Estate Development Association, is the leading organization for developers, owners and related professionals in office, industrial, retail and mixed-use real estate. NAIOP comprises 18,000 members in North America. NAIOP advances responsible commercial real estate development and advocates for effective public policy. For more information, visit www.naiop.org.

MEDIA CONTACT:
Kathryn Hamilton
703-904-7100
hamilton@naiop.org