Is the Industrial Sector Ready for Demand?
CRE’s industrial sector has been raging full speed ahead all year.
With contemporary brands boosting the competition around who can provide the fastest delivery, it’s quickly raising the bar for all major retailers. In today’s world, same-day service is becoming an expected aspect of any online transaction.
While everyone races to meet ever-intensifying consumer demands, it’s easy to forget who’s actually carrying the load. In this case, it’s industrial real estate. But how long can this cycle persist?
If the industry stays on the same trajectory of expansion that we’re on right now, industrial CRE won’t be able to sustain the expanding demand that’s coming along with the new year. Let’s take a deeper look at industrial’s current plight.
Online Shopping: Hotter than Ever
No one can deny that e-commerce has grown exponentially in the last few years. As this convenience-based shopping method began exploding in popularity, the delivery wars began. Companies have been competing towards guaranteeing their clients speedy delivery of their online orders.
3-days, 2-day, same-day, and now even instantaneous deliveries are a reality in today’s retail market. The impact on the industrial sector can’t be overlooked as it’s putting incredible pressure on the last-mile section of delivery. As e-commerce picks up its speed, it’s becoming harder and harder to fulfill their promises.
Existing Industrial Infrastructure Can’t Handle the Increased Volume
Today’s industrial sites aren’t able to keep up with the demand. Warehouse inventories aren’t equipped to sort, hold, handle, and process the number of goods sold on the web.
Many of today’s standing industrial warehouses were built in a totally different era - meaning they are designed for a different business altogether. The age of forklift sorting is over. Online shopping has demanded a completely new approach to navigating the industrial space. A tech-savvy approach has been implemented on a large scale throughout industrial centers dealing with online orders.
Today’s warehouses run off of complex algorithms, intensive care of each individual item, and a tech-powered approach to sorting and tracking. Unfortunately, it still is not enough. Even with these boosts, today’s industrial centers still aren’t capable of meeting e-commerce demands.
If the existing industrial spaces aren’t able to make it all happen, what about adding new ones?
This is a common question, but there are a few problems that come along with beefing up CRE’s industrial sector. Unfortunately, even this won’t be successful in fulfilling all of the e-commerce orders expected in 2020 and beyond.
If we continue moving on the path of same-day deliveries, the number of industrial spaces per capita would have to undergo a big boom. In order to get consumers their goods in a 12-hour period, cities would need to be crowded with storage spaces - and this still doesn’t address the issues of far-off rural deliveries. Taking it even further, e-commerce’s transportation needs are immense. CRE would need to implement more automation, increase manpower, and optimize technology’s greatest advancements.
Looking towards the new year, industrial CRE needs to develop a new game plan to support the online shopping industry.
What is your take on the online-industrial struggle?