{"id":1004145146,"date":"2016-06-01T11:55:16","date_gmt":"2016-06-01T19:55:16","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004145146"},"modified":"2022-12-05T21:29:48","modified_gmt":"2022-12-06T05:29:48","slug":"omni-channel-retails-omnivorous-hunger-for-industrial-space","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/omni-channel-retails-omnivorous-hunger-for-industrial-space\/","title":{"rendered":"Omni-Channel Retail&#8217;s Omnivorous Hunger for Industrial Space"},"content":{"rendered":"<p>By Alice Chung, Analyst, Moody&#8217;s Investors Service<\/p>\n<p><a href=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2014\/06\/Alice-Chung.jpg\"><img loading=\"lazy\" decoding=\"async\" data-attachment-id=\"1004097743\" data-permalink=\"https:\/\/www.commercialsearch.com\/news\/demand-for-u-s-logistics-re-faces-lack-of-available-top-tier-industrial-space\/alice-chung\/\" data-orig-file=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2014\/06\/Alice-Chung.jpg\" data-orig-size=\"242,244\" data-comments-opened=\"1\" data-image-meta=\"{&quot;aperture&quot;:&quot;0&quot;,&quot;credit&quot;:&quot;Chung, Alice&quot;,&quot;camera&quot;:&quot;&quot;,&quot;caption&quot;:&quot;&quot;,&quot;created_timestamp&quot;:&quot;1399550930&quot;,&quot;copyright&quot;:&quot;&quot;,&quot;focal_length&quot;:&quot;0&quot;,&quot;iso&quot;:&quot;0&quot;,&quot;shutter_speed&quot;:&quot;0&quot;,&quot;title&quot;:&quot;&quot;}\" data-image-title=\"Alice Chung\" data-image-description=\"\" data-image-caption=\"\" data-large-file=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2014\/06\/Alice-Chung.jpg?w=242\" class=\"alignright size-full wp-image-1004097743\" src=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2014\/06\/Alice-Chung.jpg\" alt=\"Alice Chung\" width=\"242\" height=\"244\" srcset=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2014\/06\/Alice-Chung.jpg 242w, https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2014\/06\/Alice-Chung.jpg?resize=150,150 150w\" sizes=\"auto, (max-width: 242px) 100vw, 242px\" \/><\/a>Despite volatility in the capital markets and uncertainty\u00a0about\u00a0the state of the global economy, logistics real estate fundamentals continued to strengthen in the first half of 2016, driven by a rise in e-commerce. As a result, the supply-chain model has been\u00a0forced to adapt quickly, making industrial REITs\u00a0one of the biggest benefactors of this ongoing trend.<\/p>\n<p>The rapid shift to e-commerce shopping is a key growth driver for the industrial property sector and plays a significant role in creating demand for industrial warehouses. Well-located distribution centers are critical in fulfilling orders, especially as consumer behavior has evolved into a \u201cneed-it-now\u201d lifestyle.<\/p>\n<p>Retail e-commerce sales totaled $87.5 billion in the fourth quarter of 2015, a 16 percent annual growth rate, according to the <a href=\"https:\/\/www.census.gov\/retail\/index.html\" target=\"_blank\" rel=\"noopener\">Census Bureau<\/a>. U.S. e-commerce retail sales are projected to reach $306 billion this year and have been averaging gains of 10 percent annually throughout much of the past decade, with the strongest growth in the last several years. As Moody\u2019s has stated in previous research, U.S. online retail sales are averaging 7 to 8 percent of total retail sales and could potentially achieve\u00a0a double-digit share of the total in about three years.<\/p>\n<p>Adding to this demand for industrial space is the pressure that Amazon puts on traditional retailers and other online competitors. The shipping game is constantly being redefined by this retail giant. It first began with two-day shipping, followed by next-day and now same-day shipment in 23 metro areas. This poses a huge challenge for traditional retailers, because where Amazon goes, other retailers must follow. Now more than ever, brick-and-mortar stores are focused on proximity to customers, otherwise known as <a href=\"https:\/\/www.commercialsearch.com\/news\/the-last-mile-retail-responds-to-a-need-for-speed\/\" target=\"_blank\" rel=\"noopener\">\u201cthe last mile,\u201d<\/a> leading to a surge in demand for big-box facilities as well as smaller, infill warehouses.<\/p>\n<p>The increase in new construction of state-of-the-art mega-distribution warehouses\u2014facilities of more than\u00a0300,000 square feet, with 30-foot ceilings or higher\u2014has quadrupled over the last four years. Demand for modern Class A facilities continues to be strong, especially in West Coast markets, where big-box vacancy rates are trending below 5 percent.<\/p>\n<p>Rental rates should grow during 2016 in the 2 to 4 percent range, and demand has\u00a0exceeded supply for 24 consecutive quarters, driving industrial vacancies down to 5.6 percent in first quarter 2016.<\/p>\n<p>While industrial REITs continue their path toward\u00a0improved profitability and higher revenues, we do see potential risks, ranging from the impact of rising interest rates (largely dependent on how far and fast rates rise when they do) and concerns of supply built on a speculative basis in select markets where tenant demand is slowing.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>By Alice Chung, Analyst, Moody&#8217;s Investors Service: Despite capital markets volatility, industrial REITs continue to benefit from steady growth in online sales.<\/p>\n","protected":false},"author":1242,"featured_media":1004097743,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21748,21783,23891,21749,21684],"tags":[],"class_list":["post-1004145146","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-industrial","category-investment","category-national","category-retail","category-viewpoint"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v23.4 (Yoast SEO v24.6) - 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