ORANGE COUNTY, CA—The drive to deliver retailproduct to the consumer ever-faster—sometimes called the“Amazon effect,” is causing many e-commerce retailers to work towardfacilitating direct supplier-to-consumer transactions. This trendis increasing the demand for industrial realestate that brings these goods closer to the consumer, andit's creating some logistical challenges as theneed for industrial fulfillment space increases.GlobeSt.com spoke with Mike Nelsen, chiefdevelopment officer of online merchandising and fulfillmentplatform CommerceHub in Albany, NY, andJim Linn, SVP investments for Illinoi-basedCenterpoint Properties' Southern Californiapresence. In Part 1 here, we discuss this demand and the impactit's having on commercial real estate. Stay tunedto GlobeSt.com for Part 2, in which we discuss some of thelogistical challenges this trend brings up and how the market ismeeting the demand.

GlobeSt.com: What are the implications of suppliersinvesting in industrial real estate to remain competitive in the“Amazon effect” arena?

Nelsen: At the end of the day,Amazon.com is changing the perception of the consumer. It startedwith the idea of product expansion—the idea of being able to offera lot of product—and on the heels of that they introduced theirPrime program, creating another perception change regarding whatconsumers should expect. Third, they introduced FBA, the “fulfilledby Amazon” program. To compete, retailers have started and hadstarted leveraging drop ship in the form of being able to expandproduct, their first line of defense in order to be competitive.With Amazon investing in distribution centers now,there's a new layer of pressure to get products to the consumerquicker and cheaper.