Image Source: Southeast Real Estate Business

Source: Industrial Sector is in Good Health

With millions of Americans working from home amid the pandemic and generally staying away from large group settings, industrial demand for e-commerce has only picked up. Online sales in June 2020 comprised 29.6 percent of all retail sales, according to the U.S. Commerce Department, nearly double that of June 2019 (15.9 percent).

Minneapolis-based Target reported that during its first quarter, which runs from February 1 to April 30, its digital sales grew 141 percent compared to first-quarter 2019. Union, New Jersey-based Bed Bath & Beyond, while announcing a 49 percent decline in overall sales, said its digital sales grew 82 percent in its first quarter, which ended May 31. Additionally, the National Retail Federation (NRF) and Prosper Insights & Analytics released their annual household survey of back-to-school shoppers. Of the 7,400 respondents, 55 percent said they plan to do all of their back-to-school shopping online, which is up from 2019 (43 percent).

Americans shopping online for clothing, household items and especially food has driven the industrial sectors throughout the region the past few months.

“Retail and office got hit pretty hard by the pandemic, but industrial continued pretty strong because of e-commerce,” says Sim Doughtie, president of King Industrial Realty Inc. in Atlanta. E-commerce retailers such as Seattle-based Amazon and Walmart have been at the forefront of the industry since the beginning of the COVID-19 outbreak in the United States, with each company hiring thousands of employees to keep up with online shopping demand.

In mid-March, Bentonville, Arkansas-based Walmart pledged to hire 150,000 workers in a six-week span at its stores and distribution centers. The company met that goal two weeks early and then pledged to hire another 50,000 employees. Amazon has been announcing fulfillment centers and delivery stations across the Southeast, with new facilities slated to go up in Mt. Juliet, Tennessee; Little Rock, Arkansas; Charlotte, North Carolina; and Suffolk, Virginia.

In the Tampa area, e-commerce players are entering and expanding in the market as well, says John Dunphy, managing director in JLL’s Tampa office. According to research from CBRE, the East Tampa submarket absorbed nearly 1 million square feet year-to-date. Additionally, there is 2.3 million square feet under construction in the Tampa Bay area, with a vast majority of it being for thirdparty logistics (3PL) companies and e-commerce use.

Amazon recently acquired 82 acres in Temple Terrace to develop a new warehouse. According to media reports, the property, which is located 10 miles northeast of downtown Tampa, sold for $26.4 million, and Atlanta-based Seefried Properties will develop the facility. Furthermore, Ace Hardware is expanding its ecommerce capabilities by developing a 315,000-square-foot facility in Plant City, 25 miles east of Tampa. “E-commerce growth has been across the board in Tampa, which is a dynamic of a very healthy market,” explains Dunphy.

Similarly, Doughtie says Atlanta’s fundamentals have impressed him given the state of the global economy during the second quarter. Atlanta saw nearly 6.3 million square feet of absorption in the second quarter, almost 1.8 million square feet more than the first quarter of this year, according to data from King Industrial Realty.

New construction dipped by about 2 million square feet quarterover-quarter, but of the 4.5 million square feet in new product, 80 percent was speculative, suggesting developers are bullish on the health of the local industrial market from a demand standpoint.