Are Micro Fulfillment Centers Future of Commercial Real Estate?

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In the last few years, commercial real estate, with its supply chain management and technology, has attracted interest from investors as the startup role for the network across the country. Following the infrastructure distribution around the world, the micro fulfillment sites have gained traction. Despite this, both the properties appeared to be complementary to each other. The regional facilities are feeding the micro fulfillment networks, so they are both being built simultaneously. Check out the details for a better understanding.

Hungry customers

Measuring the scope and size of the phenomena can be quite challenging given the novelty of the concept and the way it lines between the different property types. Thus micro fulfillment centers in an industrial estate or a shopping mall are counted as retail. Moreover, the task can be complicated due to the overlapping industry from urban logistics to delivery centers and back of stores.

The number of micro fulfillment centers in the grocery industry grew from a dozen. In fact, in the upcoming five years, the growth will result from the great demand for food retail going online.

A study has revealed that the eCommerce situation in US grocery sales jumped from 3.4% in 2019 to 10.2% in 2020. The shelter greatly accelerates it in place behavior due to the coronavirus pandemic. The results are from a survey conducted by grocery eCommerce platform Mercatus. It was completed last year during September. The figure from the research is expected to rise by 21.5% by the end of 2025.

While Hornyak identified that the industry is expecting The E-Commerce penetration of grocers to increase by 20% within the coming 3 years, the dramatic growth has forced the process to pay extra attention to the centers. As a result, they are starting to look at strategies shifting from installed fulfillment of e-commerce to taking benefit from the automation, whether local or original facilities, to boost efficiency and capability in serving online shoppers.

Small is pretty

The requirement for rapid fulfillment of perishable goods like groceries is acute, but the logic driving the micro performance and development also applies to the original market niche. During the last year, Fillogic, a technology firm, teamed up with the mall owners Simon Property Group, Brookfield Properties, Macerich, and Taubman for opening micro-distribution centers at multiple retail properties in Connecticut and New Jersey.

While the other players expanding in the micro fulfillment centers were housing startups providing technology for The E-Commerce branch for operating the urban micro firm insights within a few hundred to 1000 square feet.

The company, as of now, has locations in New York, Manhattan, Los Angeles, Brooklyn, San Francisco. It is identified that the flexible small fulfillment centers, no matter manual or automated, can quickly fulfill the requirements of dense metropolitan areas for deliveries in a window of time that can be as short as an hour. Further, there is an expectation of continued innovation in the supplies for complex Data analytics and enormous auto transportation for creating new users of the facilities.

The day is not so far when you can see semi-autonomous trucks platoons going down the road without any driver. Thus the progression from the regional distribution to the local distribution through these micro-distribution facilities will be complementary. It will make the overall system more efficient and fluid. But for this, there will be a requirement for great space and other technological advancements.

Reinvesting spaces

Someone willing to invest in the real estate industry must understand that there are now emerging opportunities with the explosive growth of e-commerce generating demand for micro performance centers. However, a lot of capital is required that has to get into the game. Thus, property developers, private equity firms, and institutional investors evaluate the market to benefit from available opportunities.

Establishing miniature logistic sites in a metropolitan occupied place will present significant challenges, different from operating in a big rectangular building outside of population area. Specific issues like roadblocks, finding adequate parking space for delivery, truck, and municipal support for logistic operations in the residential areas have to be addressed first.

Besides, a range of property types could be provided for the micro fulfillment center. The logical one for sure is going to be some retail facility. However, it must be located in a good location. It can be shuttered buildings or some old space with proper access.

There are also great opportunities for urban fulfillment. It was found that Fabric successfully runs live sites in Israel and the US at the current time. It also includes downtown Tel Aviv underground, an automated warehouse present in a parking structure. The space of which is around 18000 square feet. While the average clearance height is 11 feet.

The company is successfully expanding the network throughout the US, where it already has live-size establishments in New York City. They use complex software that helps map out where the centers must be located for proper operations. They consider the cities with football teams more attractive for the E-commerce market.

Fabric is currently searching existing spaces that measure between 10000 to 13000 square feet and have a good ceiling height of at least 12 feet or about 30 feet. The area is enough to accommodate all the equipment, which generally will include high-end vending machines.

On the other side, Hornyak understood that the firm could open the facility in the old gyms, small warehouses, or big box stores. The repurposing of the places is precisely what they have been looking for. Although one might not consider it a good option, the space requirement and the opportunity it provides the business to use is more than enough to succeed and deliver the services to the residents.

Conclusion

The advancements brought in the real estate industry due to the coronavirus pandemic are an excellent opportunity for the new investors to bring in their money and get great returns even when they do not own a vast building space. Be it a small garage or old gym, and the properties are now repurposed to use it to the best in terms of e-commerce requirements. It is the demand for online platforms which has made it possible. In fact, in the coming time, the order will be so high that the investors might have to reconsider investing in the properties and consider putting money in those options that will bring rental incomes. No doubt, this might be complicated to understand at first when you are new in the industry. However, professional support here can make a great difference and ensure you avoid putting money in a place that won’t help you or bring returns as desired. Private Capital Investors is a reliable company one can trust for professional services. They have been dedicated to assisting investors in making the most of the investment. With experienced and certified experts, the company is well prepared to instruct and help understand things about the industry. The professional support from a well-established company light will guarantee your great results. So do not hesitate to call them and schedule an appointment.

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