Meta Description: If you want to invest in commercial real estate, look into the emerging trend of mixed-use properties and fulfillment centres which will thrive beyond 2021.
Commercial real estate (CRE) in Canada may be one of the industries that are suffering because of the coronavirus pandemic, but it is showing signs of picking up and thriving right into 2021 and even beyond. Although there may still be plot twists that will cause a lot of changes in the patterns for leasing and transactions, it seems that the industrial sector has become CRE’s saving grace.
eCommerce Drives CRE’s Future
According to industry professionals, the retail and industrial real estate trends that initially emerged in 2019 were fast-tracked greatly by the pandemic. The upsurge on the lease rates and construction of distribution centres and warehousing blasted off with the growth of ecommerce. Because of this, the potential for converting non earning shopping centres into last-mile fulfillment centres has also increased.
On PwC’s Commercial Property Outlook, it was noted that enclosed malls and street retailers especially in the downtown area of Toronto, Vancouver, and Montreal are still experiencing low foot traffic due to the continued vacancy of a lot of the office towers. Because of this, the evolution of retail properties may have to happen. There will be a need for malls to be converted to residential complexes or mixed-use properties, with some of the space to be used for warehousing as well as for distribution, fulfillment, or last-mile delivery centres. This is to fulfil the ever-growing need for online shopping as consumer behaviour shifts towards ecommerce.
With this, it certainly seems like warehousing, fulfillment, and logistics are CRE’s winners this year. These industrial real estate sections have remained robust all throughout the pandemic. This is mainly because of the increased demand from food delivery services, medical supply companies, home improvement retailers, and of course, ecommerce.
Although the biggest challenge now is the acquisition of premiere quality space ideal for ecommerce facilitation, many professionals say this can be solved through repurposing excess retail space. In fact, storage and industrial sectors are forecast to benefit from the upgrades and modernization done to the ports of St. John and Halifax
and also from the multi-level industrial properties that are on the rise in such areas as Vancouver.
Mixed-Use Properties and Why They’re Good Investments
Now that we have established how mixed-use properties along with fulfillment centres are the commercial real estate sectors that will thrive beyond 2021, it is time to look into the what and why of things. What are these so-called mixed-use properties and why are they the best investments moving forward?
Basically, mixed-use properties are commercial properties that contain both residential and commercial spaces. They can be single building developments or can be several buildings or even an entire neighborhood. They can include hotels, gas stations, restaurants, retail stores, parks, and multifamily housing, among others. Apartment buildings with office or retail space are also among these, although it must be noted that for most of these developments, the residential area has more square footage than the commercial section.
The popularity of mixed-use properties began in 2016. They are attractive to investors, renters, and buyers because they provide convenience for people who would like to live in places that are within walking distance to jobs, shops, restaurants, pharmacies, gas stations, and wellness centres. These developments provide the opportunity of buying not just a home or a space or a store, but also an experience of belonging in a community and getting that neighborhood vibe.
Another great thing about mixed-use properties that make them really good investments is that most of their retail or commercial spaces complement each other. It is like a one-stop shop where residents, office workers, and even hotel guests are provided with what they want and need without having to go far. This increases the economic viability of the places where there they are located.
Fulfillment Centres and Their Importance
Meanwhile, a fulfillment centre is the actual location from which third-party logistics providers fulfil orders from customers of ecommerce retailers. They exist to ensure that online orders get to customers on time, thereby relieving ecommerce companies from handling this process that is vital yet challenging to the operations.
These fulfillment centres are where the order fulfillment process happens. This is basically getting online orders to the doorsteps of customers. The way this works is that
the inventory of an ecommerce business is stored in a third-party logistics’ fulfillment centre to prepare for customers’ orders. Once an online shopper completes a purchase, the item or items are picked or sourced from the inventory. They are then packed, labeled, and shipped. These centres can also process orders from big box orders from businesses as well as those from normal consumers, who will require for their purchases to be shipped directly to their homes.
The importance these fulfillment centres have brought for ecommerce retailers include the ability to scale businesses in the long run and the capability to improve the processes for shipping and returns. If you intend to launch new products in the future, outsourced fulfillment centres will help in their speedy movement into the market. They are also able to get better rates for shipping because they are able to negotiate with major shippers due to their high volume of shipments. This will allow any ecommerce business to lower their shipping costs or even offer free shipping.
As fulfillment centres forward package tracking numbers to the merchants who avail of their services, these can then be passed on to the customers who would like to know where their purchases are at. Plus, if customers have the need to return their purchases because of whatever reason, a fulfillment centre can strengthen the process of facilitating these returns. Returned items are sent to the centre instead of directly to the merchant, thus enabling store owners to ensure that these are processed with fewer issues. Through this, they just have to send out refunds when needed, instead of coordinating the entire return shipping process.
As you can see, there are several reasons mixed-use properties and fulfillment centres are thriving despite the challenges brought on by the pandemic. These reasons are what make them the winners in the commercial real estate market and will propel their success even beyond 2021. So, if you are still looking for investment prospects for the coming year, look no further. You can be sure to get great returns for your money if you will invest it into developments geared towards these areas.