Rising e-commerce demands for warehouses offer a boon to real-estate owners while promising greater potential for last-mile development, according to The Wall Street Journal (subscription).
Warehousing boom: Warehouses are in greater demand as online retailers seek fulfillment centers for timely local dispatch in response to more consumers seeking efficient home delivery.
Rising rents, lower vacancies: Industrial properties are enjoying high rents and record-low vacancies fueled by the thriving online retail market. Industrial rents are up 7.1% from last year, and vacancies fell to a new low of 4.3%. In hubs like New York and Los Angeles, vacancy rates teeter below 2%.
Last-mile development challenges: Many plots eligible for industrial projects are being used for residential apartments and hotels. At the same time, expansion of warehouses closer to residential areas is undesirable. Builders are responding to the last-mile demand with creative propositions such as urban-friendly vertical construction.