CREJ

20 / 28

Page 20 — Retail Properties Quarterly — February 2018
T he retail industry is evolv-
ing, and while the growth of
e-commerce has not made
traditional retail obsolete, as
once predicted, it has forced
the entire industry to adapt to
changing consumer behaviors and
meet a new set of expectations.
With almost any product available
for online purchase, consumers are
less likely to drive to a store, park,
walk in, make a selection, stand
in line, pay and then drive home,
unless there’s a compelling reason.
As a result, retailers are introducing
new solutions that offer customers
both the ease of online shopping as
well as memorable in-store experi-
ences that reinforce their brands.
This evolution also means that
retailers in Colorado and across
the country are thinking differently
about their real estate needs. One
emerging trend is the growing reli-
ance on the industrial market for
manufacturing, storage and dis-
tribution solutions as companies
employ more e-commerce strate-
gies.
• Future demand for industrial space.
Regardless of how companies are
choosing to adapt to changing
consumer demands, the industrial
market is starting to play a major
support role in the retail revolution
and will continue to do so in the
coming years.
E-commerce users typically
require up to three times more
industrial space than a traditional
retail supply chain user, accord-
ing to CBRE’s 2018 U.S. Real Estate
Market Outlook. The report goes on
to predict that with e-commerce
sales forecast to
grow by 10 percent
annually and to
top $500 billion by
2020, demand for
high-quality, well-
located industrial
real estate will
remain steady.
Last year alone,
the Denver metro
area delivered 5.4
million square feet
of new industrial
space – the high-
est since 2001 –
according to CBRE. Looking at 2018
and beyond, Denver’s strong indus-
trial and logistics market is well
positioned to continue providing
the type of proximity to consumers
and accessibility to major transpor-
tation arteries that the retail indus-
try needs.
• How industrial space can be used.
Advances in e-commerce have cre-
ated a new kind of retail experience
that allows consumers to get what
they want, when they want it. Con-
sider the evolution of Amazon, for
example.
In 2005, Amazon introduced
Amazon Prime, which offers free
two-day shipping on most prod-
ucts. More recently, the company
introduced Prime Now, which guar-
antees free two-hour delivery in
select cities, including Denver. This
type of on-demand consumerism
has created a feeding frenzy and, to
keep up with demand, Amazon has
constructed dozens of fulfillment
centers across the country to store
thousands of products that are
ready for shipment at a moment’s
notice.
Amazon aside, smaller operations
also are driving demand for indus-
trial space. As companies continue
to grow in Colorado, many are find-
ing success through e-commerce
retail strategies that require more
space for their operations.
For example, Fenix Outdoor
Imports (the parent company
behind popular outdoor brands
including Fjällräven) nearly doubled
the number of its Colorado employ-
ees a couple of years ago, necessi-
tating a move into a larger industri-
al/flex space in the Colorado Tech-
nology Center that could accommo-
date immediate and future growth.
The warehouse houses manufactur-
ing, distribution and office func-
tions, as well as a showroom that
doubles as a retail staging area.
Similarly, WishGarden Herbs –
Colorado’s herbal remedies expert
– relocated to the Colorado Tech-
nology Center from Boulder in
2014 to expand its manufacturing
and distribution operations due to
increased consumer demand across
the country. This woman-owned,
family run company has grown
from a small startup to a nationally
recognized company by employing
Retail Trends
Ryan Good
Executive vice
president, partner,
Etkin Johnson Real
Estate Partners,
Denver
CBRE
Deliveries of industrial space in the Denver market, compared with population growth
for the area.