The growth of e-commerce combined with the consumption habits of echo boomers — the children of baby boomers — will spur the growth of multi-channel retail strategies, according to a new report from CBRE Group, Inc.
While the growth of these strategies poses challenges for traditional brick-and-mortal retailing models, it also provides numerous opportunities for retail that will impact real estate markets.
CBRE’s “The Future Impact of E -commerce on Industrial and Retail Real Estate” finds that the need for multi-channel strategies will create new opportunities for retailers, such as programs that allow consumers to purchase a product online and pick it up at their convenience at a locker in a local store.
Additionally, popular same-day home delivery strategies will likely require that future distribution centers be proximate to consumers, which should create increased opportunities for urban in-fill development.
Furthermore, markets near UPS or FedEx hubs are most likely to attract major distribution centers to service e-commerce sales.
“The challenges facing retail real estate markets due to the rapid changes taking place in how and where consumers shop goods are well known but there are also substantial opportunities in this evolving environment,” said David Egan, director, Research & Analysis, CBRE.
The report also found that the market for urban high-street retail remains robust as prime retail rents, especially in coastal gateway markets have either reached, or are approaching, all-time highs.
This can be partially explained by the fact that high-street retail offers shopping-as-entertainment and non-commoditized products.
Seasoned e-commerce companies are opting for build-to-suit (BTS) developments that can provide increased infrastructure, heavy power, higher clear heights, an abundance of land and are located in 24/7 zones.
Retailers, particularly apparel chain stores, continue to combat the trend of consumers treating a store as a “show room” for products that may ultimately be purchased online.
As consumers are provided more purchasing options online, stores engaged in core e-commerce sectors are now more vulnerable to lower profit margins, likely translating to lower rents for strip and power centers that cater to these types of tenants.
The aging of the U.S. population, coupled with the implementation of health care reform, is expected to increase demand for medical uses in retail centers.