Real Estate Investors Are Betting on Warehouses Instead of Retail Stores. Why we need to pay attention.

The infrastructure for a whole new world of consumption is under construction right now.


This was quite a headline in a recent edition of Bisnow Commerical Real Estate News: Amazon To Build 1,500 New Last-Mile Warehouses In Arms Race With Walmart.” That is a lot of warehouses. As author, Matthew Rothstein puts it:

Amazon’s real estate frenzy is already well underway, and it goes beyond distribution centers. In September alone, the company estimates it will open 100 new facilities, between warehouses, offices, data centers and retail concepts.

Amazon is not the only one building warehouses. Consider this Bloomberg headline: Warehouses Beat Malls as Virus Fuels Record Global Investment.” The article, authored by Jack Sidders, reports that:

Warehouse deals accounted for a record share of global commercial real estate investment in the first half of the year as the surge in e-commerce during lockdown fueled demand for logistics properties….Warehouses surpassed stores to become the third-most-popular real estate asset class after offices and homes.

When we put those two headlines together, we can get a glimpse of the future of retail and employment.

  • It’s going to be about speed to the consumer more than it is about merchandising.
  • It’s going to be more about distribution than it is about manufacturing in the U.S. and Europe.
  • It’s going to be about operations and logistics more than it is about retail.
  • It’s going to be about making the consumer the final link in the supply chain.

E-commerce sales are poised to be 16% of all retail sales in Europe and 14.5% in the United States, and it is just the beginning. The infrastructure for a whole new world of consumption is under construction right now. How we will all fit into that new world is a question that we all need to ponder.

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