Is there a shift in the Industrial sector of Commercial Real Estate from logistics to data centers?
Industrial is KING has been the overall theme in commercial real estate since the pandemic sent the e-commerce industry into over-drive and the demand for warehouse/ distribution centers skyrocketed. However, it seems the industry giant, Amazon is sending a message as they shift their warehouse strategy. According to Bloomberg, last month Amazon announced plans to shed at least 10 million square feet of warehouse space after reporting slow growth and a weak profit outlook that it attributed to overbuilding. Amazon cancelling or delaying plans for at least 16 warehouses this year coupled with the trend of Industrial Real Estate firms looking further into the data center development space, opens a new outlook on the logistics sector of commercial real estate.
In Bisnow’s article, Industrial Sites Start Flipping to Data Centers Amid Fears of Logistics Slowdown, “over the last several months, a growing number of sites once planned for distribution centers have been pivoted to data center projects. The world’s largest logistics real estate player has entered into development partnerships with data center providers, and others have sold properties originally slated for warehouses to companies looking to build massive data center campuses.
Pandemic-driven building booms in both sectors and similarities in siting requirements had previously fueled competition over land between the two industries, but now experts say logistics companies are increasingly exploring whether data center development will drive stronger returns on land holdings in certain markets.” This is in line and proof of many REITS and development firm’s real estate activity nationwide. For all the details, https://www.bisnow.com/national/news/data-center/logistics-industrial-real-estate-firms-dipping-their-toes-into-data-centers-113934.
All in all, it is a very interesting time to watch the commercial real estate sectors shift and change similar to witnessing the pre-pandemic retail shift. Either way as trends twist and shape the market new building development technology changes as with building standards and safety codes. Many times, buildings built specifically for a certain commercial real estate sector are eventually re-positioned in the market to fit another sector. With that, be sure your buildings are up to life-safety standards and always be sure they are retrofitted for seismic activity. Buildings built prior to 1997 are a great candidate for seismic assessment at the very least. Saunders Construction offers budgets for seismic retrofits for building owners or commercial real estate professionals looking to invest in the integrity of their buildings.
Contact Saunders Construction if you have any questions regarding seismic retrofits or budgets for seismic retrofits, https://saundersseismic.com/contact/