How Retail Is Revitalizing Industrial Development

June 20, 2016

When you think about all of the goods you shop for and purchase online, there aren’t many product categories left out. It seems everything is available with just a click, and the statistics are staggering: online sales in the U.S. accounted for more than $340 billion last year. What’s more, those figures are 15 percent higher than they were in 2014, which charted at 15 percent above 2013.

In fact, used recently released U.S. Department of Commerce figures to calculate that online sales account for all retail sales growth. That growth, in turn, is fueling one of the strongest years to date for the industrial real estate sector. Online shopping is causing a rush to build new, improved distribution centers and the industrial market is responding with a boom in big-box buildings.

Unlike the more common application of “big box” in real estate, these spaces don’t house massive retailers. Instead, they’re designed to serve a retailer’s operations – including online sales. By definition, they’re large industrial buildings built using pre-cast or tilt-up concrete construction with at least 300,000 square feet with ceilings of 28 feet or higher. Big-box buildings are used primarily as distribution centers, since their solid construction and expansive floor plans are well-suited to handle logistics.

Last year, 61 million square feet of new big-box space was delivered, and more than half of that was developed on spec. It’s not a significant leap for investors, given exceptionally favorable occupancy statistics. Out of nearly 2,000 big-box buildings in North America, only 151 were vacant in 2015. With this type of construction on the rise and online commerce booming, 2016 may hold even more promise.

To learn more about investment opportunities in the Midwestern industrial market and what the latest trends reveal for the year to come, contact the professionals at Intelica Commercial Real Estate.