Industrial Shift: The Warehouse as Profit Center

Posted on December 28, 2017

Written by Paul Briggs

With retailers pivoting to better serve customers both online and in stores, an important shift is underway in the industrial real estate sector. Warehouses, historically viewed as cost centers where goods sat waiting to be shipped to a store, are evolving into profit centers that help retailers maximize revenue and differentiate from their competition. With strategically-located fulfillment centers, retailers can get goods into the hands of impatient consumers faster. Warehouses located closer to customers also make it easier to attract workers to fill the abundant fulfillment job openings.

This shift has fueled tremendous growth in warehouse demand and rents. The resultant value creation has generated the potential for superior investment performance in comparison to other major commercial property types over the past five years. Anticipating continued strength, investors have bid cap rates down to new lows.

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