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Industrial Real Estate News. How E-commerce is Driving Warehouse Sales & Leasing

The retail industry is starting to fully comprehend that the way people shop is changing. Even though Internet sales have continued to grow at an exponential rate, it is only now that retailers are beginning to truly embrace this fact and have started to scramble to change their businesses to be more Internet sales friendly.

The proof can be seen in all areas of commerce, including the commercial real estate industry. Los Angeles warehouse sales skyrockets in 2016 and the cost for square footage increased at a substantial rate. Demand for space outpaced availability, and the trend is continuing in 2017. In fact, California warehouse sales are outpacing every commercial area in the country because retailers of all types are seeking space to establish distribution centers for their Internet sales.

Internet Sales Will Continue To Grow Over The Next 10 Years

Internet sales are expected to grow over the next decade to a point where they will account for over 65% of all retail sales. This is due to:

  • Increased accessibility to products. Consumers love access to different products that they cannot easily attain in their local areas.
  • Social media. Social media can drive sales more effectively than most advertising campaigns. Once word “gets out” about a product, it becomes high in demand.
  • Millennials love the Internet. Millennials are now considered to be the largest group of consumers. They love to shop on the Internet and they want to be able to buy more types of products, such as groceries from their mobile devices.
  • Better pricing. Businesses can keep prices lower by stocking them in warehouses instead of displaying them in storefronts. This encourages more sales and increases profitability.

The largest reason for increased Internet sales, however, is convenience. People enjoy the convenience of shopping for what they want outside of normal operating hours. As this trend continues, warehouse sales Los Angeles will continue to surge. Retail businesses will not have an option but to convert to Internet sales if they wish to remain competitive in the Internet Age.

In the 1950’s, it was not uncommon for the milkman to come to your home a few times a week. Delivering milk, fresh butter and other similar products, the milkman was just one of many similar delivery services that people enjoyed. Sadly, the trend faded away by the mid 1960’s and the fresh products you once received at home had to be purchased at the store.

The New Digital Milkman

Things are changing once again in the retail world and it appears as if the milkman is returning. Online retailers are changing the way that people shop for groceries again, and it appears that online ordering and personal deliveries are returning. People are turning more to their Internet devices to purchase what they need, including their groceries.

Large retailers like Wal-Mart have recently rolled out an online grocery service where you can order your groceries ahead of time and they will be waiting when you arrive. They have been aggressively marketing this service with large discounts for first time users. Now, Amazon has just announced that it is seeking warehouse spaces across the country to accommodate their new grocery services that they desire to open in the New Year.

Grocery retailers large and small, independent food providers and specialty goods will need to change their business plans to accommodate this new trend. Online purchasing is what the Millennials and Generation Z understand, and the older generations are getting accustomed to the convenience.

Warehouse Sales And Distribution Centers

Los Angeles warehouse sales have skyrocketed in the last few months and availability of properties has become almost non-existent. Warehouses that become available quickly move off the market, and new construction is so limited within this area that businesses are seeking properties in the nearby Inland Empire for their companies.

Pending warehouse sales Los Angeles and surrounding area have nearly doubled since these major retailers have made these announcements. Businesses of all sizes are quickly seeking warehouse and distribution space so that they can gear their business to meet the new retail demands.

Businesses should not be fooled that this is a temporary shift in how goods are sold. The Department of Commerce is anticipating over 35 percent of all retail sales to come from Internet sales by the end of the decade, and continued increase each year thereafter. If you are looking into warehouse space, now is the time to act.

If your company is interested in warehouse or industrial properties in and around Los Angeles or the Inland empire, you are encouraged to contact us. Our company specializes matching businesses with the right commercial industrial properties for their needs.

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Third quarter industrial real estate reports have been released and the information is phenomenal. The push for businesses to convert to e-commerce instead of increasing their physical retail locations has become a driving force in the commercial warehouse market. Warehouse properties within the Inland Empire have seen significant growth in filled spaces during the third quarter, and industrial real estate options in the Greater Los Angeles area are nearly unavailable.


What Is Driving The Demand For Industrial Warehouses?

The high demand for warehouse buildings can be attributed to one thing: the Internet. Internet sales continue to grow as consumers demand a way to shop for the best deals on items they want, and they want to shop when it is convenient for them, not the business.

Industrial research shows that businesses who wish to remain competitive, and those who wish to tap this unbridled market of customers, are switching their business plans to embrace the Internet. Evidence of this trend has been confirmed with a recent announcement by mega retailer Wal-Mart Corp.

In their third quarter reports, Wal-Mart informed its shareholders that it will be dedicating the next two years to increasing their web presence instead of looking for more brick and mortar buildings. Wal-Mart has already rolled out a program where people can order groceries online and pick them up at the store in an effort to get more people to visit their website to see what is offered. It is easy to assume that the mega retailer will start searching for warehouse properties to convert into fulfillment centers.

Industrial leasing in this area did have one major setback during the third quarter. The finalization of the bankruptcies of Sports Authority and Sports Chalet opened up nearly 1 million square feet of office and warehouse space in the Inland Empire. Even with this loss, warehouse property data still shows a positive net gain of space filled during the third quarter.

How We Can Help Your Business Grow

The Lee Chang Group is a leading commercial real estate company that can help your business buy, sell, or lease warehouse properties within the Inland Empire and Greater Los Angeles area. Our professional staff provides buyer, seller, landlord and tenant representation services as well as property valuation and dispositions. We can help place you in the right property for the right cost.

The figures from Q2 2016 are in for warehouse sales & leasing and they are astounding. In fact, this is some of the best industrial real estate news that e-commerce businesses and real estate investors could know. Second quarter figures have shown that leased warehouse space during the second quarter exceeded 70 million square feet, representing a 6.6 percent year over year increase.

What Does This Mean To Real Estate Investors?

Investors should pay close attention to the industrial real estate news released by commercial real estate services firm CoStar Group. In their second quarter report, CoStar Group has shown that Inland Empire’s Vacancy Decreases to Five Percent (5.0%).

The Industrial vacancy rate in the Inland Empire market area decreased to 5.0% at the end of the second quarter 2016. The vacancy rate was 5.2% at the end of the first quarter 2016, 5.1% at the end of the fourth quarter 2015, and 5.2% at the end of the third quarter 2015.

Flex projects reported a vacancy rate of 6.4% at the end of the second quarter 2016, 7.3% at the end of the first quarter 2016, 6.8% at the end of the fourth quarter 2015, and 7.8% at the end of the third quarter 2015.

Warehouse projects reported a vacancy rate of 5.0% at the end of the second quarter 2016, and remained at 5.1% at the end of first quarter 2016 through the end of the third quarter 2015.

Real estate investors will benefit from looking at these figures very closely. With a year over year increase of over six percent in warehouse sales & leasing, and e-commerce growth continuing to expand at over 15 percent year over year, investors interested in real estate will benefit from looking into purchasing or building industrial warehouse space.

E-commerce suites of all sizes are looking for ways to remain competitive as the demand for quicker shipping services increases. Large players in the e-commerce industry continue to upgrade shipping services so that they can entice more customers, and smaller sites are following their lead.

Internet based companies are sweeping through industrial areas and securing warehouse space as they try to broaden their shipping options. Those who are aggressively seeking overseas sales are going into areas like the Inland Empire area of California and aggressively securing warehouse space because of its easy accessibility to railroad and cargo ship transportation.

What Does This Mean To E-commerce Businesses?

The U.S. Department of Commerce has released a report showing that e-commerce is increasing at a rate of 15 percent per year. This is exponential growth in the retail industry and the demand is expected to continue at this rate for the foreseeable future and even increase.

With such positive information about Internet based commerce, commerce sites of all sizes are scrambling to meet the demands of worldwide consumers and prepare themselves for local growth. Securing warehouse space throughout the country is part of this growth plan.

Warehouse Sales & Leasing in California’s Inland Empire

The Lee Chang Group is a leading warehouse sales & leasing company serving the Inland Empire area of California. Offering complete representation services for buyers, sellers, landlords and renters, the Lee Chang Group has successfully represented 10’s of millions of square feet of warehouse space in the Inland Empire region for clients from around the world.

With extensive knowledge of the available properties in the area, a working relationship with many of the property owners and builders, and a professional staff, the Lee Chang Group continues to fill warehouse space in the Inland Empire area.

When asked what this exciting industrial real estate news means to them, the Lee Chang Group replied that this type of news is the driving force behind their success in warehouse sales & leasing. They know that the future is in warehouse space and they continue to work aggressively to stay on top of this field and provide their clients with the best representation.

Investors, builders, renters and landlords have all come to the realization that for the most professional warehouse sales & leasing representation, they go to the Lee Chang Group.

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