Online Sales & Returns On The Rise: Industrial REITs To Gain
Zacks Investment Research | Jan 23, 2019 11:06PM ET
It’s not a secret anymore how the e-commerce boom is redefining retailers’ marketing strategies, affecting their business model and keeping retail landlords on tenterhooks. But the same mode of retailing has also brought into limelight the once-lesser attractive real estate — logistic properties.
In fact, amid improving economy and better job market that have infused confidence among consumers of their well-being, buoying the spending tendency, the overall retail spending reached $850 billion during the 2018 holiday season, denoting 5.1% year-over-year growth. This, encouragingly, marks the highest level in six years, according to Mastercard’s SpendingPulse.
And more importantly, online sales surged to $110.6 billion this holiday season, indicating a 17.8% year-over-year increase. This upside is anticipated to send across positive ripple effects across the industrial real estate industry.
In fact, companies are putting immense efforts to improve and revamp their distribution and production platforms in order to support the thriving e-commerce business, address a larger customer base and boost urbanization. Retailers are focusing on faster delivery, which is propelling demand for modern distribution facilities. As such, demand for warehouses, distribution centers and other industrial property remains strong, and continues to surpass supply levels. Also, last-mile properties are witnessing a solid increase in asset values.
Furthermore, not only online sales, but also online returns are opening up scope for this asset category. This is because returns from the online sales platform are usually more than in-store sales. In fact, per a Zacks Investment Research
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