Between 1952 and 2005, 1,500 malls were built in the United States, at a rate outpacing population. In the 1990s, at the peak of the mall era, there were 48 malls within a 90 minute drive of Times Square. Shifts in consumer behavior and shopping habits have changed real estate needs…and to the death of malls, which analysts predict 1 in 4 will close by 2022. Also by 2022, many analysts agree that the share of total retail sales driven by e-commerce will rise to 17%, an uptick of nearly 5% from previous year’s estimates.
The growth of e-commerce and consumer expectation of quick delivery has shifted real estate demand from malls to warehouse space. With online shopping (and returns) ranging from groceries to furniture, strategic logistics and warehouse distribution centers have turned into a focus point for retailers. One need look no further than the increased investment in warehouse stock by some of the world’s preeminent investors as an indicator of this trend. Jonathan Gray of Blackstone points out that brands selling direct to consumers online require 3x more warehouse space than traditional brick and mortar retailers.
The challenge for e-commerce retailers is finding warehouse space. According to CBRE, vacancy rates for warehouses has declined for 34 straight quarters to a historic low of 4.3 percent. New warehouse construction are occupied by e-commerce fulfillment and distribution operations as soon as they are completed. While warehouse space is relatively easy to build, it is difficult to find cost-effective development sites close to dense cities where land is scarce.
To navigate the changing real estate landscape and meet operational goals, e-commerce companies must be willing to embrace modern strategies that accelerate decision making. In this digital age, companies are turning to software like Occupier’s portfolio and deal management platform to improve real estate outcomes. Modern real estate management software like Occupier helps real estate teams make strategic decisions that support warehouse growth and distribution needs. By streamlining the site selection process in Occupier, companies are able to quickly evaluate potential sites, compare them to market conditions, and automate the negotiation process in order to identify the optimal solution in the shortest period of time.
The end result of better managing the process of finding and occupying distribution space is a better customer experience for the buyer. If e-commerce companies are able to reduce the amount of time scrambling to find warehouse space, they can focus on what really matters — delivering items to customers in less time and reducing return cycle time.