Industrial Real Estate: Shifting Focus 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 overdrive, and the demand for warehouses/ distribution centers skyrocketed. However, it seems the industry giant Amazon is sending a message as it shifts its 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 attributed to overbuilding. Amazon canceling 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. Still, experts say logistics companies are increasingly exploring whether data center development will drive stronger returns on land holdings in certain markets.” This aligns with and proves many REITS and development firm’s real estate activity nationwide.
All in all, it is very interesting to watch the commercial real estate sector 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 do building standards and safety codes. Buildings built specifically for a certain commercial real estate sector are often repositioned in the market to fit another sector.
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Seismic safety remains essential whether your property is used for logistics, data centers, or other industrial purposes. Saunders Seismic provides retrofit services to help protect your building and ensure compliance with life-safety standards. Contact us to discuss your retrofit needs and safeguard your investment.