Law Office of

HENRY B. LaTORRACA

Civil Trial Attorney

E-commerce helping to increase value in warehouse space

| Jul 25, 2016 | Uncategorized |

As shoppers shift their spending to online retailers, industrial real estate in California is growing in value. In fact, rent prices for warehouse spaces in Los Angeles and East Bay San Francisco have had significant increases over the past year, exceeding the 5 percent rent growth that warehouse space has experienced nationally.

While warehouse space prices are benefiting from the popularity of e-commerce, values of brick-and-mortar retail stores aredeclining. Green Street Advisors predicts that around 800 department stores in the U.S. are likely to shut their doors in a few years, leaving 20 percent of the anchor space in malls vacant. Though retail sales have been increasing, there is a clear shift towards e-commerce. In a year-over-year analysis from April, department store sales decreased by 1.7 percent while e-commerce sales increased by 10.2 percent.

Major mall operators have been spending hundreds of millions of dollars to make their spaces more attractive to the modern consumer. These malls and others have added experiential activities and restaurants that do not face the online competition that clothing and electronics stores do. Shopping centers that are focused on groceries have not felt the impact of online competition so far, but analysts expect they will in the near future.

Commercial real estate investors may be able to benefit from changes in the real estate market if they understand what factors in the economy are causing the changes. If they are considering purchasing properties in a real estate sector that they have not worked with before, an attorney can advise them about the potential merits and drawbacks of the transaction.

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