Industrial Real Estate Predictions for 2017

With increasing demand for warehouse and distribution center space, 2017’s industrial real estate market looks poised for another stellar year. Since 2010, an increasing share of the industrial real estate sector’s growth can be attributed directly to escalating internet sales from businesses of all sizes. As the second largest industrial market in the country, Chicago will continue to benefit from this trend for the forseeable future.

This demand is in addition to the established industrial users such as manufacturers, assemblers and warehouse users. Internet retailers range from Amazon and other big-box heavyweights to mid-size specialty stores, clothing chains and retailers of all sizes looking to enter or expand within the e-tailing space.

The Ideal Industrial Real Estate Location

It should come as no surprise that the demand for industrial warehouse and distribution center space is especially high close to sea ports and other areas with strong intermodal infrastructure. With industrial real estate and warehouses in such first-class locations, companies are primed for efficient supply chain transportation to and from partners and customers including:

• Hub warehouses
• Fulfillment centers
• Stores
• Deliveries from suppliers
• Shipment providers
• End users

Not only does ideally situated industrial real estate allow for quick deliveries and receiving, but it also contributes to more efficient operations and ultimately lower operating costs for industrial tenants – goals of nearly any business looking to make a profit and/or enhance customer satisfaction with quick delivery at low costs.

Industrial Real Estate Location Compromises

The competition for prime industrial real estate locations; however, has resulted in dwindling warehouse availability, with demand currently exceeding the supply. Many e-tailors, especially those new to the game or those looking to establish a warehouse presence in numerous markets, are being forced to settle for:

• Smaller spaces
• Less than ideal locations
• More expensive rent
• Inefficient building infrastructures
• Expenses associated with construction, upgrades or retrofits to make certain buildings or locations work in support of their business

While 2017 is sure to have a lot of surprises in store, the continued escalation of the e-Commerce marketplace is likely to keep the the industrial real estate sector on its current upwards trajectory.