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E-Commerce Boom and the Construction Industry: New Demands Call for New Revisions

While e-commerce is a large driving factor in our lives, we don’t realize how much of the world around us it affects. Fifteen years ago, coming home to packages on the porch was a rare sight. Now, it’s a rare sight not to come home to next-day deliveries at the doorstep. 

Aside from our personal lives, e-commerce has an effect on almost every industry – but now more than ever, the construction industry is adapting to keep up with the changing needs of the market. Online retailers are now investing more money in industrial space to accommodate the growing needs of online business. That means fewer retail fronts are being occupied and more tenants are searching for industrial space. Many companies that do have retail locations are now converting those into distribution centers – taking a retail space and turning it into an entirely different use of industrial space. 

Sam’s Club, as an example, is preparing to reopen some of its vacant retail stores as a fulfillment center for online orders. One of its 139,000-square-foot retail spaces closed last year in Massachusetts, as the company announced its plans to close an additional 63 locations and convert select stores into distribution centers to better fit its needs and serve its expanding customer base. 

Though it might seem simple to switch the needs of a physical location, construction professionals are needed to make adjustments based on the building requirements. With the demand for a new kind of building comes specialty contractors needed to do the job. When it comes to converting a retail space into industrial, these specialty contractors need to know exactly what they’re doing – they need to ask the right questions and make consistent building adjustments with the needs of the customer; otherwise, the building will fail. 

Tight retail space will require remodeling to open up the floorplan to allow a proper manufacturing area along with designated logistics drop-offs/pickups outside the facility. The floors of the building need to be strong enough to support machinery without leading to costly repairs and level enough for equipment to function properly. Even ceilings in many retail buildings are too small to support the vertical stacking capabilities needed for an effective distribution center. To convert these spaces, the construction industry has to adapt – quickly. 

Businesses that might not have enough retail locations to convert into manufacturing centers are turning their resources to new-build industrial buildings to accommodate their needs, and the demand for industrial spaces has increased significantly over the past year. 

According to a recent Industrial Insights report by JLL, supply continues to enter the pipeline even in the wake of record development in 2019 in Orlando alone – pricing in the industrial sector has risen alongside the share of new construction over the last year and is expected to continue to increase moving into this year. 

Mega warehouse developments are being built across the U.S. to keep up with the changing retail market. For example. Chewy, Inc. – the premier online destination for pet owners – opened a new Ocala fulfillment center in 2018. The 600,000 square-foot, $40 million distribution center is one of three newly constructed spaces located in Ocala 489 Commerce Park. 

The number of warehouse projects utilizing 1 million square feet or more increased from 23 to 48 from 2007 through 2018, according to Dodge Data & Analytics. The need for industrial space only continues to rise, resulting in new warehouse construction and remodels of existing retail spaces in the near future. This trend confirms how the construction industry is constantly evolving to fit our needs – reiterating the importance of watching the market and learning to adapt accordingly.

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