E-commerce has understandably skyrocketed over the course of the COVID-19 pandemic. This uptick in online shopping means that the U.S. as a whole is going to require additional warehouse properties to facilitate the storage and handling of the exponentially increasing number of orders.
With countless Americans stuck at home, and with a considerable amount of bricks-and-mortar retail spaces temporarily or permanently closed, shoppers have resorted to the internet to purchase everything from fast food to furniture to the latest and greatest technology. And even as the pandemic situation beings to improve in light of increased vaccinations, economic and marketing experts are confident that the trend of individuals conducting increased online transactions isn’t going anywhere.
As more and more customers turn to their smartphones and computers to acquire the goods and services they want instead of visiting stores, the industrial real estate sector is scrambling to meet the demand for over 1 billion square feet of warehouse space that is needed to support this new consumer trend.
JLL, a leading company in the commercial real estate space, conducted a market analysis that indicated that before the pandemic, approximately 35% of all industrial leasing agreements were affiliated with e-commerce in some capacity. However, with the recent surge of online shopping activity, JLL discovered that more than 50% of leasing activity is now directly connected to the online retail sector.
The dramatically large-scale shift to e-commerce presents a lucrative opportunity for savvy real estate investors to capitalize on. Many investors that owned retail properties are desperately attempting to convert them into functional storage facilities or processing centers to adapt to the fluctuating market dynamics. More still are planning to allocate their funds to industrial spaces, which will normally incorporate warehouse space as a substantial segment of their portfolio holdings. With all that said, if you have been considering investing in warehousing- and distribution-focused properties, 2022 is the ideal time to do so.
One of the most considerable advantages of warehouse properties in 2022 and beyond is that the majority of corporations that have transitioned from physical to online selling platforms will necessarily require storage space for their inventory. Accordingly, there is going to be a rapid and significant rise in demand for processing and warehouse facilities. Investors will be able to optimize their return on investment and not have to worry about their properties sitting vacant—viable corporate tenants will be getting in line willing to pay top-dollar for usable space.
Another added bonus of warehouse investments is that the maintenance costs are relatively minor as compared to retail or residential assets. The main focal points for industrial real estate properties are efficiency and utility—not aesthetics. There is minimal upkeep and investors do not have to worry about making extensive and costly repairs, installing the latest and greatest appliances to attract quality tenants or revamping the interior design of their properties. At the end of the day, that means a healthier bottom line and increased passive cash flow, which should be the end-goal for all real estate investors. What’s more, warehouse tenants typically are more amenable to signing extended leases. This means that there is less turnover, which translates into less stress for investors when it comes to sourcing potential tenants and cuts down on marketing expenses.
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It’s safe to say that the warehouse boom is here to stay. Don’t let this great opportunity to generate sustainable and healthy passive income pass you by! The experts at Express Capital Financing take pride in providing innovative and efficient funding solutions to real estate investors of all sizes. Whether you need a bridge loan, commercial real estate loan or another form of hard money loan, Express Capital Financing is your one-stop-shop to get the money you need when you need it to accomplish your investment goals. Contact us today to learn more about what we have to offer!