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Fulfillment centers are the evolving face of the retail sector

On Behalf of | Jul 21, 2017 | Commercial Real Estate |

While the commercial property market in California and around the country has performed well overall in recent years, the retail sector continues to struggle to cope with the nation’s evolving shopping habits. The popularity of online operations like Amazon has prompted several prominent brick-and-mortar retailers to file for bankruptcy over the last few years, and abandoned malls and deserted big-box stores are becoming familiar sights on the American landscape. However, the consumer shift toward online buying has created a new and thriving commercial property segment in certain strategically placed communities.

Consumers enjoy the convenience of buying online, but the competition for their business is fierce. Retailers like Amazon, Costco and Walmart understand that online shoppers expect fast delivery, and they are building vast warehouse and fulfillment operations to keep up with consumer demand. These distribution facilities are generally built in areas with low real estate costs and easy access to major markets, and they can revitalize local economies by increasing tax revenues and providing jobs.

Research from the University of the Pacific suggests that fulfillment centers have created about 10,000 new jobs in San Joaquin County over the last five years, and these jobs generally pay significantly more than the state or federal minimum wage. Reports indicate that a major Amazon distribution center in Tracy has buoyed all areas of the city’s economy and helped to increase sales tax receipts by 35 percent, and experts say that property tax revenues are also beginning to inch higher.

Attorneys with experience in this area may pay close attention to developments in the commercial property market. Economic upheaval is often the harbinger of new opportunities, but seizing these opportunities is not always straightforward. When demand for space grows and vacant properties can be put to more productive use, attorneys could help commercial real estate owners to obtain the permits and clearances required.