E-Commerce-Driven Investment Opportunities for CRE Pros

 August 9, 2023

By  Guy Gray

E-commerce has revolutionized the retail landscape in recent years. You can buy everything from headphones to groceries, which would have been unheard of in the past. Furthermore, as the demand for online shopping continues to surge, the need for robust logistics and fulfillment centers, last-mile delivery facilities and data centers has skyrocketed. 

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This trend is something investors in the commercial real estate (CRE) sector can’t ignore. Let’s dive deeper into the investment prospects driven by the e-commerce boom, specifically focusing on industrial real estate.

E-Commerce’s Impact on Industrial Real Estate

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The e-commerce boom can be attributed to the significant increase in consumer preference for online shopping. With the convenience of browsing and purchasing products from the comfort of their homes, customers have gravitated towards online retail, prompting an exponential surge in demand for e-commerce infrastructure, such as:

  • Logistics and Fulfillment Centers: The backbone of e-commerce operations lies in efficient logistics and fulfillment centers. These facilities are essential for inventory storage, order processing, packaging, and shipping. As e-commerce businesses strive to meet growing customer expectations for faster delivery times, there is an increasing need for strategically located, state-of-the-art logistics and fulfillment centers. These centers require vast spaces, specialized equipment and proximity to major transportation hubs to facilitate seamless order fulfillment.
  • Last-Mile Delivery Facilities: The last-mile delivery phase, which involves transporting products from distribution centers to customers’ doorsteps, is a critical aspect of e-commerce operations. To ensure prompt and reliable delivery, companies are seeking to establish last-mile delivery facilities closer to densely populated areas. These facilities serve as local distribution hubs, enabling faster order processing and reducing delivery times. Investing in strategically located last-mile delivery facilities offers a promising opportunity for CRE professionals to tap into the expanding e-commerce market.
  • Data Centers: Behind every successful e-commerce operation is a robust data infrastructure. Data centers play a crucial role in managing and processing the vast amount of information generated by online retail transactions. They support e-commerce businesses by storing customer data, facilitating secure transactions, and enabling seamless website operations. As e-commerce continues to grow, the demand for data centers is expected to soar, presenting a lucrative investment opportunity for CRE professionals.

Capitalizing on E-Commerce Growth

Speaking of investment opportunities, there are several strategies that CRE pros should consider as the e-commerce trend continues to grow. These include:

  • Acquiring or Developing Industrial Properties: Investors can seize opportunities by acquiring or developing industrial properties that cater specifically to the needs of e-commerce businesses. This may involve repurposing existing properties or constructing new ones tailored to the requirements of logistics and fulfillment centers, last-mile delivery facilities, or data centers. By focusing on these specialized property types, CRE professionals can tap into the increasing demand and capture long-term value as the e-commerce sector expands.
  • Strategic Location Selection: The location of industrial properties is crucial for e-commerce businesses. Proximity to major transportation networks—including highways, ports and airports—is highly desirable for logistics and fulfillment centers. Likewise, last-mile delivery facilities benefit from being situated in densely populated areas to ensure efficient and timely delivery. Investors who identify prime locations with the right infrastructure can attract e-commerce companies seeking well-positioned facilities, thus maximizing their return on investment.
  • Modernizing Existing Properties: For CRE professionals with existing industrial properties, capitalizing on the e-commerce boom involves modernizing and retrofitting these properties to meet the evolving needs of e-commerce businesses. This may include upgrading technological infrastructure, optimizing storage and inventory management systems, or incorporating sustainable and energy-efficient features. By enhancing existing properties to align with e-commerce requirements, investors can enhance the value proposition of their assets and attract high-quality tenants.

E-commerce-driven investment prospects offer the potential for long-term growth and profitability, making it an exciting time for savvy investors in the world of commercial real estate. To see how Quarem can help you use trends and market data to help with investment decision-making, request a demo today.

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About the author 

Guy Gray

Guy Gray serves as Chief Operating Officer overseeing our technology and client services teams. He is responsible for guiding Quarem application development, networking and security, as well as new client implementations.

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