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What's in this issue?
> The Impact of e-Commerce on Retail Real Estate
> Reis: E-Commerce Drives Demand for Warehouse/Distribution Space
> What’s the Top Performing MSA for Multifamily?
The Impact of e-Commerce on Retail Real Estate

As you search the web for holiday gifts this season, you probably won’t be thinking about the impact of your purchases on your local mall. But the toys you buy on Amazon or the shoes you order from Zappos are having a significant effect on retail real estate.

That doesn’t mean that malls are dying. Indeed, reports about the demise of the mall have been greatly overstated. Although news like the Sears bankruptcy in October and the announcement that the retail giant would shutter at least 142 stores by the end of the year gives reason for concern, there’s also plenty of good news about retail real estate too.

Of course, some brick-and-mortar retailers are struggling due to online sales. But while some are closing, many others—particularly those selling home goods or beauty supplies—are growing and taking new space. Grocery stores and gyms are also expanding—and many are leasing space formerly occupied by bankrupt retailers like Kmart. Some online retailers, such as Amazon and eyeglass seller Warby Parker, are even taking brick-and-mortar space, adopting an omni-channel strategy.

Mall owners and operators are responding as well. Many are repositioning their properties, adding experiential tenants and new restaurant and entertainment concepts that attract and retain shoppers. Space left empty by anchor stores is experiencing new life as well, as many landlords plan adaptive reuse projects to convert that space to medical uses, movie theaters or even open-air malls. The bottom line: most retail landlords were prepared for the expected store closings, and they anticipated the vacancies by creating redevelopment plans or recruiting new tenants.

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Warehouse Space
Reis: E-Commerce Drives Demand for Warehouse/Distribution Space

We all know that e-commerce is transforming the retail sector. But did you know that e-commerce is impacting industrial real estate as well?

The type of industrial real estate most affected: warehouses. After all, Amazon needs a place to store all those products you’re purchasing.

According to data firm Reis, construction of warehouse and distribution space jumped in the third quarter of 2018, to 37.3 million square feet nationwide, from 28.5 million square feet in the second quarter. Net absorption increased as well, to 35 million square feet in the third quarter—a whopping three times the level of the second quarter’s 11 million square feet.

Construction of new warehouse and distribution space took place in many markets across the country, and 11 metros even saw completions of 1 million square feet or more. The San Bernardino/Riverside market had the most construction, followed by Chicago, Denver, Houston and Orlando.

According to Reis, the outlook remains good for the industrial sector. Although many in the industry worry about tariffs, they have not yet made a significant dent in the sector. And with steady job growth and strong consumer confidence, consumption is expected to remain strong, so those retail sales should continue to drive growth in industrial real estate.

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Miami-Fort Lauderdale
What’s the Top Performing MSA for Multifamily?

According to data-provider Trepp LLC, the multifamily sector has outperformed the broader CRE market over the past two years. The best-performing MSA has been Miami-Fort Lauderdale, which topped Trepp’s Multifamily NOI Growth Index. Dallas and Washington, D.C. rounded out the top three.
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