» Subscribe Today!
More of what you want to know.
The Daily News
X

Forgot your password?
Skip Navigation LinksHome >
VOL. 127 | NO. 225 | Friday, November 16, 2012

Expert: Retail’s Future is Industrial

By Sarah Baker

Print | Front Page | Email this story | Email reporter | Comments ()

While there’s a ton of vacancy in Memphis shopping centers that should never have been built, there’s very little vacancy in quality product.

And as retailers shrink footprints in response to the way consumers spend money, owners of local inferior retail real estate are in trouble.

That was the message David Birnbrey, chairman and co-CEO of Atlanta-based The Shopping Center Group, gave Wednesday, Nov. 14, at the joint Memphis Metro Certified Commercial Investment Member and Society of Industrial and Office Realtors meeting, held at The Racquet Club of Memphis.

“It’s a scary time for people involved in retail real estate because categories are dropping,” Birnbrey said. “We know that retailing will never be dead. We know that people still like to touch and feel. But my kids grew up in an age of Craigslist and eBay.”

Because of uncertainty in the oil industry and fluctuating gas prices, Birnbrey said the future of retail will be bundled around transportation centers. The days of mom driving her station wagon to the grocery store, bulk shopping for several weeks’ worth of goods, freezing meat and thawing it out before use is long gone.

Instead, retail will likely be approached as it is in the Northeast and in Europe, where consumers park their car and take the train to shop for what they can carry. Even more ahead of the curve is Seoul, South Korea, where subways are wallpapered with virtual grocery stores, allowing consumers to scan the QR codes of desired items with their smartphones and have their groceries waiting on their front door step upon returning home.

“Scary stuff to people that are in bricks and mortar, but it really is happening,” Birnbrey said.

Birnbrey said the industry that he would tell young people to get into is industrial because it’s a critical part of the future of retail real estate. This is in large part due to the old days of immediate fulfillment being replaced with the “build-to-suit customer” who is willing to wait for a personalized product to be shipped from wherever it’s being made.

“When you talk to a retailer, they’re looking at very little expansion on the retail bricks and mortar, and very large-scale expansion on distribution centers and freight,” Birnbrey said. “I think industrial is the new staging ground for retail.”

The Memphis area has already seen evidence of this concept. In October, Philadelphia-based value retailer Five Below Inc. inked a 605,427-square-foot industrial lease deal in Olive Branch’s Hacks Cross Logistics Center Building 1. Five Below currently doesn’t have any retail stores in the area.

“When a retailer looks at a site for a distribution center, they’re looking at unions, right-to-work state/not right-to-work state, when was the last labor vote, utility costs, white collar and blue collar employment costs,” Birnbrey said. “It was interesting for me to find out that tax incentivization is really the last step in a retailer’s decision-making process on where to locate an industrial building.”

Birnbrey also noted that because retailers are spending about 50 percent more on retrofitting a building than they are on the building itself, the trend is shifting toward build-to-suits for those with expanding distribution networks.

“It’s cheaper for them to build a building exactly to their specifications with the upfit than it is to go into some antiquated building with 16-foot ceilings and antiquated delivery systems,” he said.

Sign-Up For Our Free Email Edition
Get the news first with our daily email


 
Blog Get more from The Daily News
Blog News, Training & Events
RECORD TOTALS DAY WEEK YEAR
PROPERTY SALES 109 433 13,330
MORTGAGES 114 591 17,349
FORECLOSURE NOTICES 11 93 3,391
BUILDING PERMITS 0 366 30,930
BANKRUPTCIES 76 352 12,695
BUSINESS LICENSES 21 108 4,597
UTILITY CONNECTIONS 77 564 19,457
MARRIAGE LICENSES 29 151 4,060

Weekly Edition

Issues | About

The Memphis News: Business, politics, and the public interest.