By Gian Rodriguez, Director, Industrial Brokerage Services
That simple phrase brought a smile to the masses in the late ‘90s each time they dialed-in to AOL and heard those three wonderful words that welcomed you into the 56K modem world of the internet.
Today, that same emotion is often evoked via a text, an app or an email with the subject line: “Your package has been delivered.”
Ok, so it’s not exactly the same thing, but for many, the daily site of a fresh stack of cardboard boxes strewn across their front doorstep conjures that familiar “you’ve-got-mail” feeling, as they see the physical manifestation of their online purchase experience delivered, sometimes within hours.
This dramatic shift in consumer buying patterns, and the seemingly insatiable need to keep up with the demand of getting those e-commerce goods directly to the consumer the next day or same day, has fueled our industrial demand across the country, where we’ve seen record net industrial absorption rates year over year. And South Florida is no different.
This past summer, Amazon broke ground on its 855,000-square-foot fulfillment center in Opa-Locka, bringing its industrial footprint in Miami-Dade County alone to close to 1.5 million square feet of space. It’s a move designed to reduce the online retail behemoth’s delivery times and shipping costs by expanding their physical warehouse presence with multiple fulfilment centers, which gets them closer to their customers.
But it’s not just about Amazon. In Miami-Dade County, roughly 4.5 million square feet of speculative industrial warehouse space is currently under construction and/or on schedule to be delivered by the end of 2018, with close to 2 million square feet of that already being absorbed.
And while there are a handful of manufacturing users occupying these warehouses, the majority of tenants are in the business of moving product. In other words, logistics — the lucrative art of transporting goods directly to the customers.
Retailers like Amazon, Target, Walmart, Best Buy and a slew of other major players do not necessarily ship the items purchased online themselves. They typically use third-party logistics companies (or 3PLs) to package, process and/or ship their e-commerce purchases to their customers, and in some cases, even process returns. And it’s that entire process that continues to fuel the need for more efficient, well-located industrial warehouse space near urban centers where people live and work.
In 2016, Cyber Monday was reported to be the largest online shopping day in history with $3.5 billion in online sales, according to Cushman & Wakefield’s 2016 Bricks Vs. Clicks Webcast statistics. Those figures reflected a 20% increase in online sales from the previous year — but that was last year.
This year’s Cyber Monday sales obliterated the previous high-water mark with $6.59 billion in online transactions. And early reports indicate $100 billion (yes, that’s with a “B”) could be spent online between November 1 and the New Year.
Call it what you want; e-commerce, e-tail, virtual shopping — the bottom line is the more goods we purchase online, the more we have to process and ship, and the more warehouse space we’ll need to do so.
And at the end of it all, we’ll bask in the nostalgia of that you’ve-got-mail feeling.
Gian Rodriguez has been with Cushman & Wakefield since 2011 and is based out of the Miami office. He represents users and investors throughout South Florida as part of the South Florida Industrial Team.
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