How Industrial Loses Under South Dakota v. Wayfair

US Supreme Court

WASHINGTON, DC–When the US Supreme Court announced its decision for South Dakota v. Wayfair last week, the narrative was largely around what the 5-4 vote meant for retail. Briefly, the court found that US states may impose sales taxes on Internet businesses, even if they don’t have physical locations in those states. Thus, online sellers — which have been responsible at least in part for the retail sector’s woes over the years — will finally have to pay state sales taxes.

To be sure the online-versus-brick-and-mortar retail dispute is more complicated than that as most large online retailers have been paying state sales taxes for some time and there is plenty of evidence that consumers shop on the Internet for reasons other than lower cost. But lost in the hubbub about how retail would be, or not, affected by the ruling, was an analysis about what it means for the industrial real estate asset class. To cut to the chase, smaller stores and the smaller pure play online sellers that rely on industrial and logistics infrastructure to move their goods are not expected to fare well under South Dakota v. Wayfair  — and that will ultimately affect industrial.