Brief

Why industrial construction is so 'hot' right now

Dive Brief:

  • Driven by a surge in e-commerce, the industrial sector has become one of the "hottest" sectors in the market, according to Commercial Property Executive.  
  • Industrial real estate in the U.S. saw an 11.7% return last year, which was higher than any other property segment, according to research and analytics company MSCI. In comparison, all property segments together averaged a 7.7% return.
  • Other factors favorable to the industrial sector in 2016 include increased sustainable energy production, an uptick in the number of states with legalized marijuana and an increase in global trade.

Dive Insight:

This shift to e-commerce in the retail sector necessitates that warehouses and distribution centers be built near population centers rather than on cheaper, port-accessible sites. The new facilities also require the latest in technology and higher ceilings to function efficiently.

E-commerce has not only changed the industrial sector, though. Construction companies who were entrenched in traditional retail build-outs and new construction have had to adjust their business models to make up for the new trend as malls start to fall out of favor with consumers.

While firms haven't quite given up on the sector, many are now focusing on the "new retail," which is experience driven. Millennials have taken the lead in this change, and Chuck Taylor, director of operations for Illinois-based Englewood Construction, told Construction Dive in November that retailers who want to see successful brick-and-mortar operations have to appeal to that demographic's desire for convenience, community and socialization as part of the shopping experience.

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Filed Under: Commercial Building