The on-demand lifestyle is there to stay and now that includes groceries too. Farm-to-fridge, dark kitchens and micro-fulfillment centers have sprung up. Therefore, industrial plants and retail spaces are designed differently to meet this need. But the big question remains. Does the supply match the demand?
Panelists delved into this question during a breakout session during the 2020 CREW Networking Convention and delved into how retailers are making significant investments in their physical distribution infrastructure.
The panelists said that low vacancy rates are driving demand beyond primary cities and into secondary and tertiary markets. "While Covid was devastating worldwide, it was a boom for the industrial market," said Mindy Lissner, EVP of CBRE Inc.
According to Lissner, there is a demand like you've never seen it before. And it is suitable for all kinds of industries. "There are currently several major requirements for pet food, furniture, domestic food and more."
It is interesting, however, that the share of e-commerce in total online retail sales has increased by 25% over the past six months to one year. "I don't think it'll go away. Buyers' shopping habits have changed and the demand for space remains."
This supply is having a hard time keeping up with demand. For example, Bethany Clark, Senior Managing Director at Cushman & Wakefield, pointed out that markets across the board are seeing the effects of demand. "Demand really follows the footprint as a consumer."
When looking at the supply chain, says Clark, many companies are looking at what they need to adjust for the future. "Supply chains have become so lean."
Lissner adds that the point is to have this “safety stock”. Today's environment reminds them that "they need a backup so they can store their shelves".
Lissner also pointed out that there is now a lot of money chasing industry, and she's seen a lot of reuse from retail to industry. For example, many regional shopping centers are transforming. “Many of the factors that influence shopping center location work well for industry too,” she explains, noting that they are close to the consumer, the workforce and most of them are close to major highways. The biggest challenges, however, are zoning, pricing, and understanding demographics. “The hard part is also understanding the types of uses within the same property. People don't like to mix trucks and cars. "
Those who remodel and customize stores – like Best Buy, which is converting 250 stores into shipping depots – will do well. "They [Best Buy] have redefined themselves brilliantly, integrated omni-channel and carried out click-and-pick," explained Lissner. She also noted that stores like Target, Walmart, Home Depot, and Lowes have also adapted well. "They all make sure that the products in demand are at that pick-up counter so that the people who pick up their items can pick up five more items."
Further information on the CREW Network Convention 2020 can be found in our further reporting below.