and developers will have to collaborate to capture the dynamic
complexities in the future supply chain.
On top of these changes, competition is increasingly pushing
vendors to conduct business globally. Because of this, industrial
real estate professionals must monitor and adapt to a changing
worldwide marketplace. As multichannel retailing increases
access to the American market for foreign retailers, commerce
has grown rapidly in Europe, Latin America, and especially
China and the Asia-Pacific region. Boston Consulting estimates
that 30 million Chinese consumers will shop online for the first
time each year in the foreseeable future.
Statistics show that 22 percent of global online shoppers
made their first online purchase within the past year. And of
course, this kind of transnational business will present critical
complexities for retailers. They will be expected to provide a
simple and seamless shopping experience for their customers;
be it via traditional brick-and-mortar shopping or via computer,
smartphone, or tablet.
Multichannel platforms, which sell products either online or
in a store, must be replaced by omnichannel delivery models
to effectively integrate both online and offline distribution.
Merchandise returns (often across international borders) along
with the complicated implications for indirect taxation will also
be major challenges that retailers will have to deal with (not
to mention the pressures to reduce warehouse shelf time and
expedite supply chains). These challenges also present major
economic opportunities for industrial developers and landlords.
While technology has advanced to support international retail,
logistics infrastructure is once again still underdeveloped,
and industrial real estate companies must take the initiative in
logistics innovation to create strategic, efficient, and secure
industrial spaces. With this in mind, it is critical that industrial real
estate companies take measures to ensure that global exchange
(even if expedited in the modern world) will still be conducted
Lastly, in today’s increasingly competitive world, many mega
e-fulfillment centers also must operate 24/7 — sometimes with 1
million square feet or larger spaces available for use. The anatomy
of the new bulk warehouse/fulfillment center requires heavier
floors, greater ceiling heights, more land for truck storage, more
trucks overall, faster distribution systems, and greater employee
manpower to process inventory flow.
Increasing demand for such scarce Class A space also has the
capacity to raise rent prices overall and has recently promoted
more speculative development, with nearly 40 percent of the
2014 market’s 110.9 million available square feet based on
speculation. All of this has to be delivered with efficiency and
sustainability as top priorities — not just because of the positive
CSR benefit associated with these goals — but because of the
need for more industrial capacity and the anticipation of new
municipal regulatory requirements in response to these changes.
Industrial real estate professionals who take a proactive leadership
position now will be able to meet the needs of clients and the
marketplace. While pressing issues, all of these significant new
factors affecting the global industrial real estate market should
ultimately motivate industrial professionals to innovate and succeed
in the new environment.
ABOUT THE AUTHOR: THOMAS E.
MCCORMICK, III, SIOR, FRICS is
Senior Vice President, Development,
for The Rockefeller Group. He
develops new opportunities for
industrial and office real estate
business through his extensive
contacts in both the brokerage and
end-user communities. A former
National President and a longtime
member of the SIOR, McCormick
is also involved in the Society’s
Foundation (SIORF), having served
as its President in 1999 and 2000.