Amazon has once again made headlines with its search for a second headquarter (HQ2). With cities across the country flocking to submit proposals, commercial real estate professionals should consider the impact of a growing Amazon and online shopping trends. The changing ways that Americans shop has a profound impact on retail and industrial sectors.
When people think about Amazon and online shopping they incorrectly assume that it will replace the brick and mortar shops. Even though online retailers are working on shipping products to customers in record time there will always be a need for local shops and restaurants. Today’s consumers are indicating a preference for grocery anchored shopping centers and mixed-use buildings. This “close to home” preference may lead to the decline of larger malls but ultimately allow tomorrows retail shops to stay competitive with online retailers. Online shopping will not wipe out retail stores, it will move them closer to consumers.
With increased online shopping, industrial distribution centers are popping up closer to major cities to meet the shipping demands of consumers. In the DFW metroplex it is common to see new distributions centers under construction well over 200,000 square feet with increasingly tall ceiling heights. Around 17.5 million square feet of this ‘big box” construction is taking place in DFW today. With tilt-wall construction methods, these should be hitting the market just in time to take advantage of low vacancy rates of around 10% for this product type. However, this trend may soon evolve as BizNow reports, “Though demand for big-box product is strong, there is a growing shift in favor of smaller, leaner warehouses and distribution centers fueled by online and physical retailers’ need to be closer to consumers.” Whatever the size, more warehouses are being constructed near major cities fueled by the online shoppers.
Real estate professionals should be aware of the increasing presence of online retailers to adapt the retail and industrial products currently in the market and to develop new buildings that can stay competitive in the eyes of the consumer.
Dylan Pumphrey interns at SVN | Dunn Commercial while finishing his Real Estate degree at the University of North Texas. He is focusing on the industrial sector of commercial real estate in the Arlington/Mid-cities area of Dallas-Fort Worth. In his free time he loves to hike and bike around his home in Denton, Tx.