Some years ago, businesses were only conducted physically. It was time-consuming and costly since some people had to travel long distances, increasing carbon footprints, unlike today, where you can buy almost anything from anywhere. Clothes, electronics, households, food, houses, land, and even cars while still in the comfort of your couch. This has affected many industries, including real estate, especially the commercial sector.
Commercial real estate (CRE) is undergoing a seismic shift, and the rise of e-commerce is the core contributor. Online shopping has remarkably changed the business world. This has forced commercial real estate to adapt to accommodate this rapid change in consumer behaviour. Let’s explore how the e-commerce revolution is shaping commercial real estate and what it means for the future of retail spaces and logistics centres.
The decline of traditional retail
The rise of e-commerce has inevitably taken a toll on conventional retail. Iconic department stores and shopping malls have seen declining foot traffic, leading to store closures and, in some cases, bankruptcy. This is due to many consumers increasingly taking their businesses online. For instance, agents and investors in residential properties highly benefit from e-commerce.
E-commerce provides them with marketing and sales platforms; they offer a variety of listings to buyers and renters. For commercial real estate developers and property owners, the decline of traditional retail has created a significant challenge. Many shopping malls and physical retail spaces are vacant.
Some have turned to creative solutions, like repurposing these empty malls into mixed-use developments. It involves having housing, office space, and entertainment venues in a single building. The idea has become a win-win, revitalizing struggling commercial areas while responding to the consumers’ needs in the digital age.
The rise of last-mile delivery
The last-mile delivery process in e-commerce offers quick and convenient shipping services, making it centre stage. Lat-mile delivery is the final stage of a product’s journey, where the order reaches the customer’s doorstep. As demand for this service increases, consumers expect their orders to be delivered within a few minutes. This has made e-commerce companies invest heavily in optimizing this last-mile process.
The emphasis on last-mile delivery has led to the need for strategically located distribution centres in urban areas. Real estate developers must adapt to this trend by constructing smaller, more localized distribution centres (micro-fulfillment centres). This is to ensure consumers are fully satisfied by making timely delivery.
Also, they ensure that these centers are situated close to densely populated areas, reducing delivery times and costs. The trend has increased demand for industrial real estate in urban areas, repurposing older buildings or developing new logistics hubs.
Demand for warehouses
As demand for online orders increases, e-commerce companies continue to seek ways to meet these quests, leading to increased demand for industrial spaces. E-commerce giants like Jumia and Amazon require expansive distribution and fulfilment centres strategically located to ensure quick and efficient deliveries. The demand for industrial real estate has led to an increase in the development of logistics and warehouse spaces.
This demand has created an investment opportunity for Investors, who can capitalize on this trend as the need for these facilities grows. Moreover, the rise of e-commerce has created jobs in logistics and fulfilment, driving employment opportunities in communities near these industrial sites.
The e-commerce revolution has significantly reshaped commercial real estate. It has revolutionized traditional retail spaces, making logistics and warehousing boom and driving the future of retail design. Flexibility and willingness to embrace e-commerce is crucial to success in this new era. As e-commerce evolves, commercial real estate will also evolve to ensure it remains a dynamic and vital part of our economy.