Click-to-collect and e-commerce: a windfall for CRE

Pivoting from in-store sales to tech-enabled sales was one of the saving graces of retail in 2020 when stores emptied out, and shelter-at-home orders dragged one. The data now shows that companies and markets better positioned to shift to e-commerce fared better than those that didn’t. 

The upside to shifting sales online, though, was that it contributed to a longer holiday shopping season, and drove record-breaking extension in e-commerce market penetration, with some reporting as much as 70% e-commerce sales growth last year. 

When a door closes…

On the commercial real estate (CRE) side of the retail coin, it has also driven demand for warehousing, fulfillment, and shipping spaces – a shift that creates an opportunity for a savvy agent or broker. 

…A warehouse opens

The World Property Journal, for example, reports that 99.2 million square footage of industrial space was taken up in the last quarter of 2020, making it the strongest quarter on record. Some 203.7 million square feet were absorbed during the course of the year, which is 27% up on 2019’s net growth.  

This overview perspective echoes the reports coming from regional data, such as in Wisconsin, as well as abroad in the UK and Europe, and Australia. According to Bizjournals.com, in Southeast Wisconsin, the industrial property market in 2020 took up square footage equal to that of all the new builds coming to construction completion in the area. 

In the UK, FM Magazine reports, that available space is outpaced by demand, and this is tricky at a time when companies will have to manage their supply chain very carefully due to Covid-19 and ‘Brexit’. 

Standing out

This kind of growth is a beacon of light in the otherwise dismal statistics of 2020, where economies around the world took huge strain – but it also draws attention to itself, which means more competition too. 

“Just because you have industrial or warehousing space on your books, don’t assume it’s a done deal,” cautions Jay Olshonsky, President and CEO of NAI Global. “Some companies are also cautious and risk-averse at the moment, so you’ll have discerning clients looking for only places that fit their needs and not every warehouse building will do that.”

At this point, analysts generally expect this trend to continue into the second quarter of 2021, although the growth line may flatten out somewhat as we begin to see a stronger return to in-person shopping in Q3 2021.

4 Predictions for Holiday Shopping in 2020

‘Tis the season… but this year, everything is different.

As we flew past Halloween and move towards Thanksgiving, Black Friday, and Christmas, all eyes are locked on retail. After such a hectic year, what will this season’s holiday shopping look like?

The 2019-2020 Shift

Last year, even with e-commerce activity at an all-time high, eager shoppers still flooded to stores and malls to do their gift shopping. Despite tons of Cyber Monday shopping, Black Friday’s turnout was impressive across the country. 2019’s holiday shopping season marked a positive direction for CRE’s retail sector – which was much welcomed after a difficult year.

But, that momentum was shot as the pandemic swept through in 2020. Since then, nothing has been the same. As a result, many of those bright outlooks established in last year’s holiday shopping season have been muddied.

This year, anything can happen.

2020 continues to defy expectations. It’s difficult to predict the movements of consumers today, especially with so many different factors pushing and pulling shoppers in different directions. Even beyond sales volume and trending gift items, the commercial real estate market is eager to see how this holiday season plays out for brick and mortar.

To gain insight into the coming months of holiday shopping, let’s explore what experts are forecasting for this season:

Here’s What Experts Are Saying

With COVID still on the radar and social distancing concerns top of mind, consumers likely won’t be hitting the stores like they usually do.

At the same time, e-commerce brands are taking advantage of these pandemic-induced circumstances to win over shoppers during this year’s holiday season. Unbeatable deals, perks, near-instant shipping, and BOPIS will be boasted by online retailers.

All this considered, experts are calling for a major slowdown for in-person shopping this year. The majority of consumers are expected to conduct their holiday shopping on the web, funneling their sales towards e-commerce and away from physical retail.

Now that we know what the experts are predicting, let’s look at how retailers are responding. This is what CRE’s retail tenants are doing to prepare for this holiday season:

Boosting Online Infrastructures

The pandemic prompted even the smallest mom-and-pop shops to open up an online portal to extend their services online.

Now, as the holiday season looms overhead, CRE’s retail tenants are investing in their e-commerce capabilities. Being able to supplement their in-person sales with online transactions is vital for balancing business this year.

Setting Aside Space for Order Fulfillment

With online orders expected to rise alongside a sharp decline in shopper volume, stores are making room for order fulfillment. Portions of retail’s physical spaces will be devoted to inventory, packing, and shipping preparations.

Still Preparing to Welcome Shoppers

Retailers are preparing to welcome shoppers in-store with a pristine shopping experience. Even though the numbers might be lower, retail tenants are still optimistic. Safety, accessibility, and convenience are all major focus points as brands try to win back their foot traffic.

One thing is for sure, whatever unfolds for retail in the coming months has the power to initiate lasting trends for holiday shopping moving forward. Don’t take your eyes off of CRE’s retail sector.