E-Commerce has Industrial Market Poised for Continued Growth

Sumner Distribution Center, Seattle. (Photo courtesy Black Creek Group)

DENVER— The industrial sector of the commercial real estate market is booming with rents growing by an average of 5.5 percent per year since 2013, outpacing the other three main CRE sectors (office, retail and multifamily). Thanks to increasing demand for e-commerce, industrial rents and occupancies are surging across a range of building shapes and sizes. Industrial warehouses link product manufacturers with consumers by providing essential storage and repackaging space for products of all types.

Black Creek Group, a Denver-based experienced real estate investment management and development firm that has completed 10.5 million square feet of industrial projects in the last five years and currently has another 11 million square feet under development, suggests that the growth may just be getting started for industrial real estate.

Black Creek’s new Market Insights Report describes secular changes to the global supply chain associated with e-commerce — for example, e-commerce retailers require up to three times the warehouse space as their brick-and-mortar peers — and cites the fact that e-commerce is still in its early adoption phase and is projected to grow from 12 percent to 25 percent of retail sales by 2025, as indications that the growth in the sector has further to run.

“While we are active in other areas of the market, we remain extremely bullish on the industrial space,” said Dwight Merriman, Head of Real Estate for Black Creek Group. “A fundamental shift is underway in how the American consumer shops, and that means demand for industrial distribution facilities located in or very near population centers will be robust for the foreseeable future.”

Click here to read the full report.


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