New Demand for Older Industrial Product

LOS ANGELES—Older industrial product has been fodder for creative office development, especially in outdated industrial markets like Culver City and Downtown Los Angeles—but there could be a new demand on the horizon. Ecommerce companies may start looking to older product as a solution to the tightening supply in the industrial market. While outdated, older industrial product is often well located and could serve as infill distribution centers for ecommerce companies to speedily serve clients.

“I think it is getting there. I don't think you have seen it widespread yet, but it will eventually get there,” Kurt Strasmann, senior managing director at CBRE, tells GlobeSt.com when asked if ecommerce users would consider leasing older industrial product.

Growing density in urban markets is aggravating an already tight industrial supply, and ecommerce users will need to find alternative spaces to store goods before delivery. “People are moving to cities, and that exacerbates the situation,” says Strasmann. “In the next 20 years, the population will be focused in 20, what they call, mega-politans throughout the US. All of the growth is in the major urban cities.”

In Los Angeles, Strasmann uses the example of the Arts District in Downtown Los Angeles as one market where ecommerce companies would look at either older industrial product or alternative spaces. “A good example is that in Downtown Los Angeles, there is a tremendous amount of residential development, and a severe lack of industrial product in that market,” he says. “As ecommerce companies analyze at how to deliver product to customers, they will have to get industrial buildings and other types of properties that can be used to warehouse product.”

Aside from turning to older product, retailers have experimented with lockers and in-store pick up as a way to get goods to customers. “Lockers are out there now,” says Strasmann. “If you buy online, you can go to the store to pick-up product. In a dream would, retailers would like to have you walk into the store to pick up your product, because when you are there, you are going to spend a lot more money. That is the best strategy, but reality is that you want you product overnight or same day delivery. The ecommerce concept has evolved to faster and faster delivery.”

LOS ANGELES—Older industrial product has been fodder for creative office development, especially in outdated industrial markets like Culver City and Downtown Los Angeles—but there could be a new demand on the horizon. Ecommerce companies may start looking to older product as a solution to the tightening supply in the industrial market. While outdated, older industrial product is often well located and could serve as infill distribution centers for ecommerce companies to speedily serve clients.

“I think it is getting there. I don't think you have seen it widespread yet, but it will eventually get there,” Kurt Strasmann, senior managing director at CBRE, tells GlobeSt.com when asked if ecommerce users would consider leasing older industrial product.

Growing density in urban markets is aggravating an already tight industrial supply, and ecommerce users will need to find alternative spaces to store goods before delivery. “People are moving to cities, and that exacerbates the situation,” says Strasmann. “In the next 20 years, the population will be focused in 20, what they call, mega-politans throughout the US. All of the growth is in the major urban cities.”

In Los Angeles, Strasmann uses the example of the Arts District in Downtown Los Angeles as one market where ecommerce companies would look at either older industrial product or alternative spaces. “A good example is that in Downtown Los Angeles, there is a tremendous amount of residential development, and a severe lack of industrial product in that market,” he says. “As ecommerce companies analyze at how to deliver product to customers, they will have to get industrial buildings and other types of properties that can be used to warehouse product.”

Aside from turning to older product, retailers have experimented with lockers and in-store pick up as a way to get goods to customers. “Lockers are out there now,” says Strasmann. “If you buy online, you can go to the store to pick-up product. In a dream would, retailers would like to have you walk into the store to pick up your product, because when you are there, you are going to spend a lot more money. That is the best strategy, but reality is that you want you product overnight or same day delivery. The ecommerce concept has evolved to faster and faster delivery.”