Struggling retailers are vacating warehouse leases that supplied brick-and-mortar locations, and it is helping to bring supply back onto the market.
Any one that has followed the industrial market for the last few years knows that ecommerce has created the heyday of industrial real estate. The industry has created tremendous demand for industrial space and has driven vacancy rates to historic lows—sub 1% in certain L.A. submarkets—creating a frenzy for more space. Now, ecommerce might be helping to increase the supply. Brick-and-mortar retail closures are beginning to turn into industrial downsizing, since fewer fulfillment centers are needed to supply brick-and-mortar locations.
“I represent some large corporations, and they have told me that because online sales are killing their business, they are cutting back on brick-and-mortar retail locations as well as the distribution and fulfillment facilities that support those locations,” Chris Jackson, an executive managing director at NAI Capital, tells GlobeSt.com. “I think you are seeing that across the board.”
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