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E-Commerce Drives Retail, Spills Into Industrial Sector
E-commerce is shaping more than the retail sector, as the race for delivery and e-commerce dominance spills over into the industrial market, as well. The growth of e-commerce, up 15.6% year-over-year in 2016 from 2015, is forcing retailers to focus more attention on last-mile delivery strategies.
That’s creating demand for smaller fulfillment facilities in infill sites closer to where consumers’ orders are ultimately delivered, notes Trepp’s Karina Estrella. Retailers are responding by picking up properties in urban areas, regardless of their existing functionality or condition.
Roughly $20.8 billion in private-label CMBS debt is secured by industrial assets, representing just 4.2% of all non-agency CMBS. Nearly 50% of industrial loan volume is allocated to warehouse and distribution centers, and given the race to keep up with Amazon, industrial demand is expected to remain strong.
Meanwhile, on the investment side, volume for U.S. industrial properties pushed past $23 billion in H1 2017 and industrial investment is up more than 20% year over year, which is outpacing overall CRE investment. Yet, private-label CMBS securitizations for 3Q 2017 issuance was just $461.4 million, a decline of 28% year over year.
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