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Three reasons investors are flocking to the heart of e-commerce corridor

Comprised of Columbus, Cincinnati and Louisville, the corridor is attracting serious investor attention due to its robust e-commerce infrastructure

September 09, 2019

E-commerce is on the rise and is transforming the way consumers shop. According to Forrester Research Inc., online sales will account for 17% of all U.S. retail sales by the year 2022.

As consumers continue to purchase more goods and services online, businesses — including the real estate industry — are adapting to stay ahead of the curve.

From 2013 to 2018, 44% of leasing activity in the corridor derived from e-commerce operations and it shows no signs of slowing.

Therefore, if you want to keep up with evolving buying trends, now is the time to invest in fulfillment space.

This growth has catapulted the “heart of e-commerce” corridor, which consists of Columbus, Cincinnati and Louisville, into a league of its own. This year especially, these cities have shown earnest promise for e-commerce investors:

  • Columbus — three speculative warehouses totaling 2.2 million square feet broke ground, including two over 800,000 square feet
  • Cincinnati — development hit an all-time high with over 10 million square feet of industrial space under construction
  • Louisville — institutional developers have secured land that could potentially introduce 3 million square feet to the market in the next 18 months

As these cities continually evolve to accommodate e-commerce needs, savvy investors are acting on opportunities within the region for three big reasons.

1. Unbeatable location

What makes these cities so desirable to e-commerce companies? Location. Location. Location.

The corridor’s robust infrastructure provides a competitive advantage due to its accessibility. Companies can transport goods via four major interstates: I-70, I-71, I-75 and I-65. These interstates enable a 10-hour truck drive to 29 of the 52 largest metro areas in the U.S., which allows for streamlined, efficient and cost-effective e-commerce delivery.

In addition to transportation access, Ohio and Kentucky have also ranked in the top 15 states for imports within the foreign-trade zones (FTZs). According to the U.S. Customs and Borders Protection, “While in the zone, merchandise is not subject to U.S. duty or excise tax.”

2. Readily available tenants

From 2014 to 2018, e-commerce sales increased 42% , indicating a need for space to fulfill consumer needs.

Since 2013, the average speculative construction has totaled 6.6 million square feet per year. E-commerce leasing in the corridor has averaged roughly 7.5 million square feet per year, proving the demand exists. If e-commerce grows to 17% in the next five years, construction investment will need to keep up to meet the demand for a prediction of 35 million square feet.

Business expansion is on the rise in the corridor, significantly increasing demand for quality industrial space. And, with new speculative construction at an all-time high and vacancy at an all-time low, the opportunity to bring in new tenants is assured.

3. Strong and affordable labor market

Access to quality, affordable labor is critical to lucrative e-commerce and logistics centers.

Fortunately, the corridor’s labor supply and cost of business support e-commerce momentum. Benefits of this region include:

  • The average hourly wage is $16.47, compared to the national average of $17.34
  • On average, it takes 31 days to fulfill a warehouse worker position, compared to the national average of 34 days
  • It is 28% more affordable to live in the corridor compared to the national average
  • Population in the corridor has grown by 10% from 2010 to 2017

Choosing the right location, tenants and talent will set up your e-commerce investment for a successful and sustainable business. Learn more about why the “heart of e-commerce” corridor is the ideal location for this investment in the full report.

Download the full report here

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