At the 2018 NAIOP iCON, Gary Anderson, head of ProLogis Europe/Asia, outlined three

disruptors in the industrial real estate industry: logistics companies lease multiple sites to ensure

their global supply chain remains intact; transportation and labor costs are more than half a

logistics company’s budget, therefore a 1% decrease in transportation and labor costs correspond

to a 15-20% savings in real estate costs; the supply chain is 100% consumer focused and getting

products to the consumer faster is more important than the cost of real estate.

There is a general shortage of labor in industrial real estate which is leading to more “smart”

warehouses that use robotics and automation to fill the void of this labor shortage. Additionally,

to assist with their need to get products to the consumers even faster, manufacturers and logistics

companies will rely more and more on predictive analytics to anticipate buying habits in order to

keep consumer warehouses stocked. ProLogis concludes, and I agree, that logistics companies will

focus on securing urban and infill logistics real estate. I estimate that we will see more shopping

centers turned into consumer distribution centers and small warehouses (under 30,000sf) with

drive-through capabilities used in in-fill locations throughout metropolitan areas to increase the

variety of ways to deliver products to consumers faster.

Whatever can be replaced by the internet, will (even some things you cannot currently imagine) as

the internet is evolving humanity. The internet is causing retail to rely on convenience, immediacy,

and product variety—what ProLogis calls “Synchronized Commerce.” Millennials will demand

forms of product delivery that stretch logistics beyond their limits such as drive through

warehouses, Uber delivery and GPS tracked deliveries (imagine timing your order to be delivered

while you are at an intersection or bus stop).

Is Industrial The New Retail?STEWART BERNSTEIN5/20/19

While no one wants to think the unthinkable, the writing is on the wall for much

of the shopping center inventory nationally, if not globally.

Staples of the current shopping center tenant mix, such as restaurants and hair salons, are already

being threatened. With few exceptions, malls, power and community centers will become extinct

as fewer and fewer stores are needed, only to be replaced by online sales. While we have seen the

beginning of the end of large malls closing down around the country, many have felt that food and

drug anchored community or neighborhood centers will be insulated from a similar fate. Not so.

Indeed, ghost or virtual kitchens are popping up in smaller warehouses in in-fill locations that

provide shared or co-working kitchens for start ups and delivery only services.

However, we are seeing now the future of retailing changing if we know how to read the signs.

Grocery, health and beauty aids, drugs, furniture and clothing are all fully integrated online and

will continue until brick and mortar stores are unnecessary for them. Here are some of my

predictions for the (distant and not-so-distant) future of retail:

Restaurants - Imagine ordering a meal from your favorite restaurant (Applebee’s, McDonalds,

Chipotle) and having it delivered without ever knowing that the meal was actually cooked in a

ghost kitchen that makes similar meals for many restaurants? Millennials are avoiding the 1-2

hour dining experiences and severely disrupting the casual dining industry.

Hair Salons – Imagine you could use a device or use 3-D imprinting to download a

world-class stylists’ cut and have your hair redesigned in your home, office or hotel. You

could change designs daily (although having a longer cut tomorrow would be tough).

Outrageous? Maybe by 2019 technology standards, but in 20-40 years, maybe not.

Nail Salons – Here too, imagine sticking your fingers in a device, and with the right chemicals

and solutions, you can download a nail treatment. Crazy, I know!

Gaming Stores – This one is easy: imagine trying a demo of the latest game and downloading

it to your computer or X-Box. This one could be here very soon if it isn’t already.

Clothing (including shoes) – Imagine having a device that creates a 3-D image of your body and

feet, uploads that image to the web and allows you to virtually try on clothing. You will be able

to see on the computer how different cuts and designs look on you and, even better, feel as the

program could also show where the clothes will not fit you.

Cinema’s – I don’t think anyone today has to imagine the ability to download new releases

anywhere anytime in pay-per-view format. True there are restaurant-cinema concepts out

there to increase the diversity of the cinema experience, but I think that is only a fad and won’t

last very long.

No matter how wild our imagination can get, technology will find a way in the future to make it

reality. Just consider how far we’ve come in the less than 30 years since the internet hit the

market.

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