Warehouses Becoming Boon for Commercial Real Estate

January 28, 2014

Warehouses are becoming a commercial real estate boon, as more retailers beef up their online business.

Online retailers such as Amazon are leading the trend, snapping up spaces for smaller distribution centers near major urban areas in an effort to get products closer to where people live, says Sam Chandan of Chandan Economics.

Warehouses are “some of the best performing space that we see in commercial real estate right now, across all property types,” Chandan told CNBC news. 

The latest PWC Investor Survey pinpointed warehouses as the strongest prospect for investment and development in 2014.

Housing analysts expect other companies to follow Amazon’s lead in purchasing warehouses near urban areas. "Small mom-and-pops are getting into the e-commerce game now as well," says Frank Cohen, senior managing director for Blackstone’s Real Estate Group.

Warehouse development is on the rise, and there has been an increase in speculative building, too. About 62 percent of the 59 million square feet under construction by the end of the third quarter in 2013 was being constructed without signed tenants, according to a report by CoStar, a commercial data firm.

Source: “Real Estate’s Least Sexy Sector Is Red Hot,” CNBC (Jan. 22, 2014)

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