JLL Launches Task Force to Fill E-Commerce Needs

CHICAGO, IL – JLL has established a new strategy to assist retailers in evolving their business models to shift to full e-commerce operations, following the onset of the COVID-19 pandemic.

In effort to solver retailer pain in a post-pandemic world, JLL’s retail and industrial experts are aiming to help retailers that were not fully prepared to transition to online operations.

The new task force will assist in ratifying supply chains to handle new volume and last mile distribution demands over the past six months.

“Not many retailers could have foreseen the dramatic acceleration in online spending and pick up in store (dubbed BOPIS) that the pandemic threw at retailers,” states JLL’s global retail chairman, David Zoba. “Retailers were stuck between the operating challenges of meeting physical store regulations, which often differed for each location, while also facing increased pressure to meet online order demand. Plus, we were sorting product distribution options in a marketplace that was occluded on who could deliver at all.”

In effort to simplify retailers’ needs, as product and distribution become one, JLL has formed a blended, dedicated service model to cater to the entire lifecycle of evolving real estate requirements, between retailers and retail property owners.

JLL’s retail, industrial and capital markets business line stakeholders will unite to form the company’s new retail industrial task force. The task force will strive to deliver customized real estate solutions to clients, through an end-to-end approach that spans the firm’s full expertise.

Through the task force, JLL will offer retail owners, occupiers and investors with professional advisory services and solutions, spanning supply chain consulting, retail & e-commerce distribution, urban logistics, retail redevelopment, capital markets scoring system for portfolios, industrial diagnostic process and a propriety system that examines real estate demand and metrics.

“Pre-COVID, only the top global retailers were truly investing in and focusing on the last mile,” says Kris Bjorson, head of retail e-commerce distribution, Americas at JLL. “Now, that US consumers have helped e-commerce surge above 20% of total retail sales – a three- to five-year leap forward – we see a tremendous opportunity to help all retailers in a better way; integrated as one team with every area of expertise required today.”

“Retail as an industry is in recovery mode, and to maximize opportunities it requires a current understanding of capital markets and how institutional investors value assets,” says Naveen Jaggi, JLL’s president of retail advisory services, Americas. “Investors were already eyeing the increasing number of retail vacancies prior to the pandemic, which subsequently has increased demand for domestic manufacturing. Dark stores or vacancies often present an ideal opportunity for last mile fulfillment center conversions especially as e-commerce delivery competition continues to grow.”

JLL points out the lack of vacancy space in the industrial sector; with the national industrial vacancy rate currently under 4%.

“Industrial rent growth remains positive and vacancy rates continue to see historic lows providing attractive, stable, long-term returns to investors,” states Craig Meyer, president of industrial for JLL Americas. “Some sectors are growing in demand faster than available warehouse supply—especially in high-density urban environments—making conversions even more opportune to lessen the impact of labor, construction and infrastructure costs associated with a complete rebuild.”

Within the industrial sector, the cold storage space continues to experience demand.

JLL’s task force plans to help clients navigate the existing complexities in relation to cold storage warehouse conversions, which require additional planning due to robust refrigeration regulations.

For such complex issues, the JLL team will execute assistance specific to the clients’ needs and property constraint evaluations, by developing a total cost to profit model. The team will aim to guide clients through common challenges, such as zoning, covenants, conditions, restrictions, taxes, truck traffic, hours of operation and pollution.

Online grocery sales for delivery and pickup in the US reached $7.2 billion in June; a 9% increase over May alone, according to survey data from the online grocery consultant, Brick Meets Click.  E-commerce leasing totaled 55.9 million square feet year-to-date in Q2, and food & beverage increased to 11.4 million square feet, as a result of the increase in online grocery adoption.

“There’s no denying conversions are a multifaceted undertaking and determining financial viability is often one of the biggest pain points in the planning process,” says Chris Angelone, national lead of retail capital markets at JLL. “By developing a total cost to profit model, our clients will have complete confidence in their spend, from assessing dark store assets to justifying rents and financing to exit pricing and beyond.”