currently under development, will de- liver purchases of up to 2.3 kilograms, approximately 5 pounds in weight, within 30 minutes of ordering. • According to the South China Morning Post, Shentong (STO) Express already has robots work- ing around the clock sorting up to 200,000 goods per day at its ware- housing facilities in Hangzhou. This has enabled the company to halve its operational costs and improve efficiency by 30 percent. Cheaper and quicker deliveries will, in turn, stimulate online retail. According to global real estate firm Savills, this will make up 20 to 30 percent of direct consumer sales by 2025 to 2030. If e-commerce continues growing at this rate, it could reach $5.4 trillion globally by 2020. At the same time, according to research by Prologis, for every additional €1 billion (approximately $1.2 billion) spent online, another 72,000 square meters (approximately 86,000 square yards) of warehouse space is required, making the industrial real estate sector one of the most promising areas of commercial real estate for the coming decade. NEWREQUIREMENTS FOR INDUSTRIAL PROPERTY Technological advances and a shift towards electronic retailing will change how industrial real estate, which includes warehouses and distribution centers, is traditionally used. NO. 1 DISTRIBUTION CENTERS WILL NEED TO BE LARGER Self-driving trucks will enable the use of bigger warehouses, which will be con- structed at greater distances from each other and from residential districts. “If you look at the history of devel- opment, up until five to 10 years ago, a 500,000-square-foot building used to be considered a ‘big box’ building. With

all that’s going on in e-commerce, now it’s become a million-square-foot me- ga-distribution center,” Colliers national director of industrial services Dwight Hotchkiss said. NO. 2 MULTILEVEL AND MULTI-STORY WAREHOUSES WILL INCREASE IN NUMBER According to CBRE, if land costs comprise 50 percent of the warehouse construction cost, the developer should increase its height and make the build- ing multilevel or multi-story for it to be economically viable. While it is difficult for people to use such warehouses, au- tomation makes storage, unloading and packaging easier. According to Colliers, the ceiling height at U.S. distribution centers in- creased by 25 per- cent to 36 to 40

same-day delivery will become the new standard for the logistics market. According to CBRE analysts, such warehouses, which will be up to 200,000square feet in size, must be located within the limits of a densely populated city to ensure the delivery of goods to buyers within a few hours. NO. 4 NEW USES FOR WAREHOUSES Experts predict a partial crossover be- tween warehousing and retail property.

> Continued on :: PG 112

Yulia Kozhevnikova is a real estate expert at, an international real estate broker with a network of 700 partners worldwide and a catalogue of more than 110,000 listings in 65 countries. Learn more at

As technology continues to evolve and shape every aspect of consumer culture, warehouse space could become one of the most attractive commercial real estate investment options.

feet from 2006 to 2015. Multi-story warehouses are common in places where land prices are high, such as Hong Kong, Singapore, Tokyo, South Korea, and densely built Eu- ropean markets. NO. 3 DEMAND FOR “LAST MILE” WARE- HOUSES WILL GROW As large dis- tribution centers proliferate, the demand for the “last mile” warehouses (from which goods are delivered directly to the buyers) will increase, and



by Yulia Kozhevnikova

Our Realtors have years of experience and personally invest. THEY KNOW INVESTMENT REAL ESTATE!


ndustrial real estate, which includes warehouses and distribution centers, is among the most profitable categories of investment properties. These types of properties offer yields as high as 7.5 percent, compared to between four and five percent for office space and five and six percent for retail space. Furthermore, long- term agreements, often ranging from five to 15 years, are possible in this sector. Technological advances have made the prospect of owning such properties even more interesting. Thanks to fully auto-

mated goods delivery in the next 10 to 15 years, we predict that the demand for offline stores will begin falling while that for warehouses will start increasing. HOW 13-MINUTE DELIVERY WILL REVOLUTIONIZE LOGISTICS Personnel costs make up to 50 percent of logistic costs. When self-driving trucks, drones and industrial robots replace people, delivering goods will become a lot cheaper.

Such technologies are currently being test- ed, appear not only promising but largely inevitable, and offer demonstrable benefits: • In April 2016, the Dutch Ministry of Infrastructure and the Environment tested 12 self-driving trucks, which crossed four European borders and travelled over 2,000 miles. • Amazon made its first drone delivery on December 7, 2016, in 13 minutes. The Amazon Prime Air program,

If you have been licensed 3+ years, personally invest, and your city is not yet covered, let us know. We’d love to share more about Out Of Town Landlord.

44 | think realty magazine :: november 2017

thinkrealty . com | 45

Made with FlippingBook Learn more on our blog