E-commerce Growth Drives Strong Industrial Market Performance, Payment Innovation, and Lean Efficiencies in Picking, Packing, and Shipping

Patricia Kirk reported for National Real Estate Investor that industrial vacancy is at an all-time low, declining by 70 basis points from a year ago to an aggregate nationwide vacancy of 5.6 percent in the fourth quarter of 2016. According to the year-end industrial market report from real estate services firm JLL, the former record low vacancy was in 2000, when the rate dipped to a 7.0-8.0 percent range as a result of market expansion coming out of the dot.com bubble.

“There are few prime opportunities for tenants right now, with 64 million square feet absorbed in the fourth quarter alone,” he says, noting that e-commerce fulfillment is the strongest dynamic driving industrial demand today. E-commerce accounts for 22.5 percent of all big-box transactions, compared with 3PLs (third-party logistics), at 15.2 percent, consumer non-durables, at 12.1 percent, and traditional retail, at 10.4 percent. From 2010 to 2014, e-commerce was in third place nationally, accounting for just 16.1 percent of big-box activity.

Increasing competition for industrial space has caused rental rates to hit record highs, breaking the $5 per sq. ft. triple-net barrier for the first time,, This has set off a building boom, with new deliveries nationwide in 2016 of 224.5 million sq. ft., compared to the previous record high of 199.2 million sq. ft. in 2008.

There are other disruptive technology elements impacting the rapid growth trajectory of ecommerce. One of these key components is payment solution technology. Sebastian Kanovich is the CEO and Co-Founder of dLocal, which provides a cross-border payment platform that focuses on enabling e-commerce businesses in the U.S. and Europe to expand into emerging markets.  He reported in Entrepreneur that the global payment landscape has significantly evolved over the past decade. The rapid rise and equally rapid evolution of online and mobile commerce has given rise to a wave of new payment methods. E-wallets, in-app purchasing, and peer-to-peer payments are all products of consumers’ increasing comfort with digital commerce. In many developed markets, older payment methods, such as checks and payment on delivery, are being replaced by alternatives that make online and mobile transactions frictionless, thus further feeding consumer appetites for online shopping.

By 2020, the digital portion of global retail sales is on pace to double from $1.9 trillion to $4 trillion, according to eMarketer. That’s not counting online sales of travel and tickets.

With the growth of international e-commerce platforms like Shopify and Magento and payment platforms like PayPal and Stripe, the barriers to e-commerce have fallen, giving life to new businesses, opening up new revenue streams for established players, facilitating economic trade, and driving technology advancements worldwide. As e-commerce continues to become increasingly global, and is fueled by the growth of internet coverage around the world and higher levels of smartphone penetration, the forms consumers use to pay for their digital and physical goods will continue to evolve as well.

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