Business-Minded Legal Solutions

Warehouse boom shines the light on commercial real estate

Unadorned warehouse space has never been the glamour showcase of commercial real estate. However, an unexpected but logical outcome of the Internet revolution has been the growth of e-commerce, along with the consumer’s demand for the rapid delivery of retail purchases made online. From the beginning, companies like Amazon have excelled in delivering their products rapidly throughout the United States, including here in Texas, by using commercial real estate consisting of warehouse and storage space.

The growth of online retail sales has been phenomenal. Recently, online purchases comprise about 8.9 percent of all retail sales, with continuing growth a certainty, according to most expert analyses. The growth of warehouse jobs has become a major economic benefit to communities throughout the country, particularly those lucky enough to be located in accessible pathways to the large urban centers.

Amazon is one of the first and perhaps the biggest e-commerce retailer that has led the dynamic growth in the demand for warehouse space throughout the country. Amazon’s ability to deliver product quickly has always been a centerpiece of its growth. The company’s expansion into products and services of every kind has marked it as a giant mover of the commercial real estate boom nationwide.

The key concept in the selection of warehouse space by e-commerce companies is location. The industry looks for locations accessible to major metropolitan areas, i.e., areas of concentrated population. Thus, for example, a somewhat suburban community, with available warehouse space or land ready to develop, and with accessibility to an urban center, would be a likely target. Where the location is accessible to two or more urban centers, all the better for  delivery versatility.

Texas is likely to benefit greatly by the phenomenal growth of the e-commerce industry in retail sales. Many areas throughout the state are prime targets for developing hubs directly accessible to large population concentrations. Developers interested in the rapid demand for warehouse space may be missing the best opportunities by putting off decisions until later. The glamour of commercial real estate has never been its motivating character, but in terms of economic return, it is now an attractive, hot area of solid profits for those ready to enter the field.

Source: The New York Times, “As Amazon Moves In, Demand for Warehouse Space Climbs,” Micah Maidenberg, Oct. 24, 2017