The Rise of E-Commerce and the Booming Flex Industrial Market
Specializes in providing actionable insights into the commercial real estate space for investors, brokers, lessors, and lessees. He covers quarterly market data reports, investment strategies, how-to guides, and top-down perspectives on market movements.
Originally nicknamed mail order decades ago, today's world of e-commerce has revolutionized how consumers shop, together with the businesses that supply these goods and services.
While online sales were becoming increasingly popular before 2020, the arrival of a global pandemic was akin to pouring high-octane fuel on the market. And even as many consumers have returned to retail shopping, the world of e-commerce continues to evolve.
Pricing continues to be competitive, delivery charges are fading, and overnight delivery is the norm. However, no matter how large or small an e-commerce business is, it needs the right type of commercial real estate to house its goods.
Enter the flex industrial market.
How Flex Is Changing How We Shop
While often smaller than its warehouse predecessors, flex industrial properties are dynamic, highly adaptable spaces that are transforming the landscape of commercial real estate. Today's CRE investors, developers, and buyers are helping fuel their success.
Here, you'll review the surge of e-commerce, the key benefits of flex industrial space, and why it has become a game-changer for businesses looking to optimize their operations. You'll also learn methods for investors to research their opportunities.
First, we'll define flex industrial, its key benefits, and why it's a vital partner for e-commerce.
Speed, Innovation, Connectivity
Flex industrial spaces offer various solutions for businesses facing the challenges of today's e-commerce era. They provide new and seasoned business owners with tools to succeed that include adaptability, functionality, and other flexible features.
Unlike traditional warehouses, flex industrial properties can be easily configured to accommodate a wide range of uses, from storage and distribution to light manufacturing and office space. This adaptability allows businesses to optimize their operations, reduce costs, and respond swiftly to changing market demands.
In some cases, flex properties offer tenants the opportunity to expand their business without moving. Newer, purpose-built spaces recognize the constant evolution that's become business as usual for many of their tenants.
Smart features are equally important to tenants of these properties. These provide more than functionality; different businesses can customize their layouts to improve an array of tasks, from inventory management to delivery procedures.
For example, inventory may be stored in a package room equipped with barcode scanning for faster order fulfillment. Other smart features deliver accurate inventory counts and help manage buffer stock and re-ordering.
Other features emphasize staff safety 24/7. These may include surveillance cameras, video intercoms, and keypads with cameras for admitting and tracking delivery employees from various sources (UPS, DHL, FedEx, USPS).
The unique advantages of tenancy in a flexible industrial property also make it ideal for the growing number of retail businesses with omnichannel distribution needs.
Merging Online and Offline Sales Channels
For those unfamiliar with omnichannel retail, it's defined as a business strategy that provides seamless experiences for customers across all channels: in-store, online, and mobile. It takes e-commerce a step further as consumers' shopping habits evolve.
While younger shoppers (Generation Z and Millennials) are the most active omnichannel shoppers, 2023 research discovered that over 50% of all retail shoppers prefer the omnichannel approach.
Businesses with omnichannel sales have created multiple touchpoints for prospective customers, which may include physical storefronts, websites, social media, and mobile apps.
For example, a clothing retailer may post new arrivals on its Instagram account and provide a live link to an ordering portal.
Successful fulfillment of omnichannel sales requires a business to locate a strategically located flex industrial space near one or more major transportation hubs and population centers.
This, combined with the property's ability to incorporate additional smart features, makes it possible for a business to offer agile, responsive customer service and just-in-time deliveries.
Next, let's look at two businesses that successfully used flex industrial space as startup venues and business expansion spaces, respectively.
#1 – Nutricleanse and Kearny Point
New Jersey's Kearny Point Shipyard, a 130-acre flex industrial estate, recently welcomed sustainable food processing startup NutriCleanse. The business leased 11,000 square feet to house their organic Neo-Pure pasteurization process.
According to the company's CEO, reasons for the start-up's choice included the location's easy access to the New Jersey Turnpike, Newark Airport, and the tri-state region.
Kearny Point Shipyard offers tenants a green infrastructure, renewable energy solutions, and an array of modern amenities. Over 200 businesses have already leased space at this flex industrial campus, with over 50% women- or minority-owned.
Kearny Point employee amenities range from outdoor walking paths to a gymnasium to cat shelters for pet-owning staff.
#2 – Alltrade Studios and Midnight Custom Cars
Flex industrial space is especially popular with smaller businesses, including those that have outgrown using their home's garage or rent-by-the-hour premises for a workshop.
Lewisville, Texas is home to one of construction specialist Alltrades' newest properties, Alltrade Workspace. Designed for entrepreneurs who are ready to expand their business, Alltrade Workspace offers two leasable spaces: Shops and Studios.
The Lewisville property is currently home to a variety of tenants, including Midnight Custom Cars. The business has drawn interest and new customers from street traffic, and from its neighbors Leaderboard SIgns.
Customers appreciate the convenience of the Workspace location just ½ mile off Interstate highway 35E, a popular route for commuters headed south to the DFW metroplex or north to the communities of Lake Lewisville, Highland Village, and Corinth.
Vehicles can be brought into the Workspace garage for various upgrades, from paint to suspensions to interiors. The expanded premises have also enabled the family-run business to expand into boat customization services.
Is It Time to Invest in Flex?
The rise of e-commerce and omnichannel retailing during the last few years has reshaped the commercial real estate landscape, with flex industrial space emerging as one of the most popular, versatile solutions for today's evolving businesses.
Investors and developers are currently researching opportunities of all sizes and locations, redeveloping obsolete commercial buildings and building from the ground up.
If you would like to see examples of successful flex industrial spaces for lease or research availability and pricing, enter your preferred city and state into MyEListing's search page and click on the Flex/Office Whs pulldown for Property Type.
It's completely and 100% free.
Other recent articles
Article Search
Share
All Article Categories
