By David Schlussel, Co-managing Partner
Discussion around “last-mile” distribution continues to dominate news headlines. Major retailers, like Walmart, are leveraging their physical store locations to provide expedited delivery of online orders. E-commerce players are getting creative when it comes to hyper-local fulfilment as well. For example, Amazon’s purchase of Whole Foods, in addition to creating an instant network of brick-and-mortar stores, is providing close-in sites to support the company’s expanding online grocery business.
More and more, we are reading about a related developing trend in which retailers are establishing showroom spaces as part of the omnichannel experience. These locations typically carry less inventory, focusing instead on giving customers the opportunity to see and touch merchandise, and for retailers to engage clients with a level of service not available online. At the same time, emerging cloud-based technologies that enable seamless inventory control are making it much easier for retailers to operate easily across multiple locations.
In short, e-commerce is creating significant demand for smaller distribution centers in dense population centers. And those located along retail corridors provide additional draw for retailers looking to establish showroom sites. Interestingly, while the current shifts in how retailing is done have heightened demand for this type of well-located hybrid property, their appeal is long established.
One example of this omnichannel concept dating back prior to the much discussed last-mile mania, is 270 Market Street in Saddle Brook, N.J. Throughout much of its 50-year history, this 78,000-square-foot building has been used as a combination retail warehouse and showroom. Initially, the property served as Fashion Barn’s corporate headquarters, distribution center and retail outlet. Next, beginning in the late 1980s, Comint Leathers leased the property for a similar use combining headquarters offices, distribution and an outlet showroom. From the mid-1990s through 2007, Porcelanosa Tile followed suit.
In short, this Bergen County warehouse and retail property has always lent itself to hybrid use. It sits on a major county roadway in a neighborhood of restaurants, stores and banks, making it a natural fit for retail. At the same time, it provides a high parking ratio and easy truck access, with proximity to major regional thoroughfares including I-80, the Garden State Parkway, and routes 17 and 46 – great for distribution. Other buildings with these attributes are also particularly well suited to today’s last-mile and omnichannel demands.
Our firm services a Northern New Jersey portfolio of smaller warehouse and retail spaces. For decades we have watched the evolution of consumer expectations and tenant requirements. Undoubtedly, e-commerce represents one of the most significant disruptors in the history of the retail and retail/industrial real estate industries.
The bottom line remains that only the largest national players can take advantage of established store networks to ease the challenges of last-mile fulfillment. Yet demand for next-day and same-day delivery, and quick pick-up is being felt by retailers of all sizes. Properties that offer the “best of both worlds” – retail space along highly trafficked corridors and distribution accommodations with ample parking and easy roadway access – are positioned to benefit in this shifting real estate landscape.
Photo Caption: 270 Market Street, in Saddle Brook, N.J., has consistently accommodated hybrid retail showroom and distribution operations.
*As seen in the February 2018 issue of MANN Report*