23 May The impact of e-retailers on commercial real estate markets
The past two decades have seen an explosion in electronic commerce. In fact, e-retailers accounted for 9 percent of all retail sales in the United States last year, up from pretty much nothing in the year 2000. With this trend predicted to continue, what are the implications for commercial real estate?
The first effect is the the decline of traditional retail stores. Many brick-and-mortar retail stores are closing their doors or downsizing operations to try to compete with e-retailers. Customers who choose to shop in physical stores want to be able to purchase goods, dine at restaurants and enjoy entertainment with a “one-stop” shopping experience. This gives commercial real estate developers an opportunity to provide retailers with property to suit their needs, such as walkable developments that will attract the Millennial, Gen X and Gen Z buyers.
Another consequence is the need for warehouses to store merchandise. An e-retailer may need a storage space for inventory up to three time as large as a traditional brick-and-mortar retailer would need. Those cities that are attracting major e-retailers such as Amazon will need new housing — apartment complexes, condominiums and other living spaces.
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