Cities near major metropolitan areas across the country are benefiting from the boom in e-commerce in a way that is impacting the real estate market. CNBC looks at one such city in California where fulfillment centers for a variety of online businesses are now providing jobs for residents. The infusion of cash into these local economies is proving to be a boon for commercial real estate and could provide a pull for developers.
Since 2012, the growth of distribution and fulfillment centers designed to deliver to individual customers has created around 10,000 jobs in the county of San Joaquin. Unlike positions in warehouses focused on bulk orders, these jobs offer a higher pay. A professional in the commercial real estate sector claimed these new warehouses also require more staff to meet the demands of small orders.
A mayor of one of the cities that now hosts numerous distribution centers pointed to a “trickling effect.” Workers from within and outside the city attract new businesses, which helps to grow the city’s tax base and increase local amenities. Developers and property managers of both residential and commercial real estate could take advantage of the potential boom in demand caused by residents with more money to spend on housing and retail purchases.
Established developers and newcomers alike may find a growth in opportunities from this market move. However, the sale and purchase of property is a process that requires funding and careful attention to detail. Choosing between venture capital, asset-based lending and other funding options is not a one-size-fits-all proposition, and the wrong choice for the situation can result in lost profits and control. Missteps in contract negotiation, management agreements and other commercial real estate transactions can also prove costly. An experienced attorney familiar with the individual’s goals and the real estate market may be able to help in the achievement of goals.