Jason W. Tolliver

Chicago, IL—Backlogs at factories are elevated, retailers are competing for last-mile storage facilities and the labor market remains tight with workers increasingly hard to find and costly to attract and retain. The state of the e-commerce industrial market is humming with high energy.

According to Cushman & Wakefield’s 2019 North American Industrial Forecast Report, the industrial sector is undergoing a rapid transformation, mostly brought about by e-commerce—a sector forecasted to grow by the double digits throughout 2019 and beyond. Healthy absorption and continued low vacancy will solidly keep the overall industrial market afloat.

“We are seeing really high industrial construction numbers and demand is even stronger,” says Jason Tolliver, Vice President and Head of Industrial Research for the Americas, Cushman and Wakefield.

E-Commerce Triggers Structural Change

E-commerce has become such a game-changer that it has triggered a structural change in the market. There is forecasted to be even more of a need for industrial facilities as there are several aspects of the e-commerce market, such as e-groceries and e-pharmacy, that are young and still needs to be developed.

“We may actually need more specialized logistics such as storage and refrigeration as we enter into somewhat uncharted territory,” Tolliver tells GlobeSt.com.

Retail and Returns

There has also been an increase for retail return centers. For retailers, speed matters and time is of the essence as they try to switch out or refund purchased goods.

“Return centers do not have to be remote,” Tolliver says. “They just need to have the space to process the return, get them back into inventory or dispose of them. Of course, a lot of this is labor-intensive and retailers need a lot of people. With our unemployment rate so low, the labor market is also tight.”

Other Influencers

According to Cushman & Wakefield’s report, there are several other trends that will influence the market over the next few years. For example, warehouses will get taller and be outfitted with the latest technology plus tenants will test and fill multi-story warehouses. At the same time, the industry will determine their facilities’ functional abilities and the amount of rent tenants are willing to pay. Retailers and the third-party logistic firms that service them will also continue to clamor for facilities within 5-to-7 miles of major urban markets. Finally, demand will further continue to increase for a variety of building types, including sortation hubs, urban depots and cold storage facilities.