A little over a decade ago, brick and mortar retail space was the hottest market, with investors and users alike scratching and clawing their way into bidding wars for the elusive corner locations or store fronts on major highways. Even Main Street rental rates were going up, even though they did not have the same foot traffic as malls and highway retail. E-Commerce spurred by Amazon.com has created an at home buying experience that has allowed consumers to visit their favorite retailers online vs. at the actual brick and mortar store. The knee jerk reaction from retailers was to focus on their online business and scale back on brick and mortar locations. This has created an influx of available retail space, which in turn, will lower rental rates paving the way for service-based companies, like restaurants, fitness centers, dance studios, schools, personal hygiene companies and the like to come back into play.
E-Commerce has been taking up millions of square feet across the country in new ground-up distribution centers, as well as, industrial supply space, both existing and new construction. With that said, E-Commerce will have to keep pace with the millennial “I want it now” mentality. Next day delivery may not be fast enough for a cell phone battery–the consumer may rather get in their car and pick it up. Amazon and other E-Commerce businesses have been so focused on their distribution centers up until now, but they will need to start creating smaller warehouses located in major metropolitan markets with retail accessibility. These “hubs” will allow the consumer to make their purchase online as usual, but still have the ability to pick it up now. BestBuy has been at the forefront of this, and is best positioned to continue this model.
Lastly, online grocery is another growing market. Local grocers are once again best positioned to combat E-commerce companies from gaining market share. There will always be a need for last minute grocery shopping, but the convenience of shopping online and having product delivered, must also be taken into consideration. Local grocers should provide deliveries of their goods straight from a specific store which will boost their sales. Brick and mortar retail space is not dead nor dying, it is needed as an accessory to e-commerce.
