Commercial Investment Real Estate Fall 2022 | Page 14

BY THE NUMBERS WITH

BY THE NUMBERS WITH

By Ermengarde Jabir , Ph . D .

CONSUMER SENTIMENT AND THE INDUSTRIAL SECTOR

Difficulties for retail sales could lead to potential storm clouds ahead for warehouse and industrial assets .

Much of the focus around the industrial sector is on the impact of manufacturing , heavy industry , and the sector ’ s role as an intermediary for goods storage before they reach their final point of sale . Increasingly , however , transactions

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COMMERCIAL INVESTMENT REAL ESTATE MAGAZINE are taking place in a manner that bypasses brick-and-mortar retail altogether , which has been a boon for the industrial sector . From the data centers housed in flex / R & D space that power the completely digital nature of e-commerce transactions to the
Consumer Sentiment and the Growth of E-Commerce
120 100 80 60 40 20 0
Oct . 1999 Jul . 2000
Consumer Sentiment Index
Apr . 2001 Jan . 2002
Oct . 2002 Jul . 2003 Apr . 2004
Jan . 2005 Oct . 2005
Jul . 2006 Apr . 2007
Jan . 2008 Oct . 2008
Jul . 2009
Source : U . S . Census Bureau , University of Michigan , Federal Reserve Bank of St . Louis ( FRED ), Moody ’ s Analytics
E-Commerce Share of Retail Sales
Apr . 2010 Jan . 2011
Oct . 2011 Jul . 2012
Apr . 2013 Jan . 2014
Oct . 2014 Jul . 2015 Apr . 2016
Jan . 2017 Oct . 2017
Jul . 2018 Apr . 2019
Jan . 2020
Oct . 2020 Jul . 2021 Apr . 2022
18 % 15 % 12 % 9 % 6 % 3 % 0 % warehouse / distribution space that stores and dispatches the items to consumers , the sector ’ s growth and strength are due , in large part , to the exponential rise of e-commerce over the past decade , aided by the shock from the COVID-19 pandemic .
To capture the effects of shifting consumer behavior , an important metric to consider is the e-commerce share of total retail sales . This percentage meaningfully impacts the industrial sector , because e-commerce requires a larger amount of warehousing and distribution square footage than traditional retail due to inventory , packaging , and shipping requirements . E-commerce sales increased by nearly 40 percent from the 1Q2020 to 2Q2020 because consumers had no alternative to buying online in light of the pandemic . As a percentage of total sales , online retail now amounts to 14.5 percent as of 2Q2022 , the most recent quarter of available data . This figure is lower than the historical peak of 16.4 percent in 2Q2020 , but still a notable gain from the first quarter of 2020 ,
FALL 2022