How Amazon s Footprint 2.0 Will Redefine Industrial Through 2025

Transcription

1 How Amazon s Footprint 2.0 Will Redefine Industrial Through 2025 Ben Conwell, Cushman & Wakefield Larry Kosmont, CRE, Kosmont Companies

2 Presenters Ben Conwell Sr. Managing Director, Practice Leader ecommerce & Electronic Fulfillment Cushman & Wakefield Larry Kosmont, CRE President and CEO Kosmont Companies

3 Amazon Effect Ben Conwell

4 e-commerce Leasing Big driver, but are we exaggerating the impact?

5 Four Building Types in Two Dimensions Service Level & Urbanization Two factors that will shape successful fulfillment chains over next five years.

6 Trends in Fulfilment Center Development Proximity carries the day, functionality is still key, and it s often about trade-offs. Culture and brand not only protected but celebrated Facilitating expansion of fulfilment capacity to bring optimal inventory as close to customer base as feasible Material Handling solution that works today and scales Optimize leverage of distribution network Proximity to UPS, FedEx, DHL, USPS infrastructure Transportation infrastructure is critical Build to suit vs. existing product Lease vs. own 3PL vs. self-perform Clear height vs. building depth Environmental stewardship and respect for associates and vendors Labor. Labor. Labor.

7 The rate of change & innovation is only speeding up. As is the pressure to deliver capacity faster & smarter. And it s only getting tougher to keep up.

8 But AMZN is for sure a tech leader

9 Drones Will Never Work They ll Get Shot Down Yes, they re working on self-defense technologies too

10 Delivery as Utility? Land, sea, air or underground?

11 Now This is Fast Fashion

12 Why Didn t I Think of That? Still another example of who the real innovative thinkers are

13 It s still Day One Convenience stores AmazonGo Drive-up pick-ups Amazon Fresh Pick-up Mall pop-ups Bookstores Treasure truck Drones

14 They re not everywhere yet, but give them time.

15 Amazon US Network Expansion This is what growth looks like - especially in last mile 70 Transactions Annual North America Building Growth by Function FC Sortation Fresh / Pantry Prime Now / Delivery Station

16 Not nearly as easy as it may seem at least for now

17 Is Industrial The New Retail? city zoning vs. consumer demand Larry J. Kosmont, CRE

18 Outline 1. What do Cities want & need? 2. Changing World of Land Uses Retail Industrial 3. Entitlements and Zoning Tools 4. Bright Future, Big Challenges

19 City Leaders: The Plumbing of the World is Changing California shifting to a reduced carbon footprint green economy Tech is changing the way we live: shifting retail & tenant mix, interaction, & connectivity (e.g. driverless cars, robots, big data) Retail adapting to changing social habits, bricks/clicks blending; new focus is on trips vs sales Loss of jobs to automation requires commitment to creating jobs Housing shortage affects all; state wide priority, less local support Cities need private $$ to create jobs, tax revenue, & housing Zoning priorities should change but will be a slow process

20 Cities Pursue Quality of Life Safety & Community Services (recreation, trash, utilities) priority but Image and Identity are key factors Appearance plays role in attracting residents, visitors, investors Creative economy wants to drive less hanging in a destination/place (coffee, public spaces, events) Economic Development a priority for most cities Retail being replaced by Creating a Place Industrial could be part of the new retail, if can generate taxes & jobs Development Project Approvals emphasis shifting: Sustainability and environment are priorities Suburbs to downtowns/town centers; placemaking, amenities Transportation vs. cars; millennials driving less, trucks unwanted Technological impacts; driverless cars, reduced parking Projects that help communities improve quality of life can receive zoning and public $$$

21 Cities Need Private Sector $$$ Cities need private investment for Jobs & Taxes Zoning policies focused on retail, placemaking, housing, mixed use, transit Approving tax increment districts (EIFDs, CRIAs) to induce private investment Industrial not on a priority except point of sale big box (amazon)

22 Tax Hierarchy of Private Investment Rooms (hotel tax & jobs) Retail (sales tax & jobs) Office/Industrial (property tax & jobs)* Residential (tax loss leader) * sales tax possible but rare

23 Next Generation Economic Development Today, Economic Development for Cities is about:

24 Outline 1. What do Cities want & need? 2. Changing World of Land Uses Retail Industrial 3. Entitlements and Zoning Tools 4. Bright Future, Big Challenges

25 Current Trends Cities are Grappling With Retail is becoming a blend and mix of different uses Food & Place are today s anchor tenants Box retail is shrinking, right-sizing, closing Trip generators: food, events, medical, housing, education Need a place or purpose to attract visits & generate taxes Consumers shifting to digital and sharing economy Retailers respond by boosting omnichannel approaches doesn t matter where/how the sale is achieved (but it can matter to a city) Demand for rapid delivery of goods purchased online driving expansion of in-fill last mile delivery facilities Impact of omni channeling on retail-mix and taxes not clear

26 Shifting Landscape Impacts Zoning & Land Use Technology shifts & evolving consumer preferences are redefining retail & industrial land uses Rise of e-commerce & demand for rapid delivery of online purchases blending retail & industrial land uses Retail and industrial become I-tail & E-dustrial What should cities support? Retail changing quickly Food uses dominating expansion Infill distribution centers respond to consumer behavior but can be at odds with adjacent land uses and neighborhoods

27 Food is defining Retail Demand What s for dinner honey? NEW WAVE OF AUTOMATION MARKET HALLS GROCERANTS

28 Consumers Are Driving The Change

29 Retail Transforming: Finding the Right Blend Delivering Retail Blend based on Trip Generation is Key Opportunity Internet is primary driver of changes in shopping patterns Trip generators can sustain centers: entertainment, education, medical, events, & specialty retailers; these plus FOOD are the new anchors Despite increases in digital market, Brick & Mortar is in demand Resized Urban formats going small Pop-Ups popping up everywhere Internet + Brick & Mortar blending staying together for the kids # of shoppers nationwide lower last Black Friday while online shopping was up 22% Internet sales = over 10% of all retail sales Boost in Last mile delivery demand

30 City View of Industrial Development Can be significant component of cities tax & job base Some cities prefer to shift to mixed use and retail Digital economy fueling in-town fulfillment centers Digital economy fueling under one roof adjacency of offices & industrial zoning issues: truck trips, adjacencies, hours No vision of last mile delivery as part of retail or destination or tax strategy

31 Outline 1. What do Cities want & need? 2. Changing World of Land Uses Retail Industrial 3. Entitlements and Zoning Tools 4. Bright Future, Big Challenges

32 What Projects Will Cities Support? Developers Pursue Projects that Achieve Community Support: Community support requires communication and compromise Need community outreach; both online & face-to-face Primary issues: traffic, safety, noise, visual, adjacencies/social Cities Will Support Projects that Improve Quality of Life: Creation of additional taxes & jobs important quality rules Quality is in the eye of the beholder Cities have funding & planning tools to assist projects

33 Primary Tax Sources Ground-up & renovation real estate projects that generate taxes through investment & job creation can achieve zoning and funding assistance TOT Tax( Hotel ) Sales Tax ( Retail ) Property Tax ( New Construction & Renovation ) Utility User Tax ( Users & Operations ) Business License Fees / Gross Receipts Tax ( New & Relocated Businesses )

34 Land-Use & Zoning Hierarchy Still Apply

35 Environmental Compliance is Achilles Heel Statutory Exemption Categorical Exemption (CE) Negative Declaration (ND) Mitigated Negative Declaration (MND) Environmental Impact Report (EIR)

36 Cities Have Economic Development Tools

37 Outline 1. What do Cities want & need? 2. Changing World of Land Uses Retail Industrial 3. Entitlements and Zoning Tools 4. Bright Future, Big Challenges

38 Tax Viability and Proper Mix of Land Uses is changing:

39 More Changes Coming: The 47% of the Future The 47% - Mitt Romney had the right number, but it really represents something different and more life-changing Technology expected to replace 47% of existing jobs. McKinsey Global Institute estimates even close to 60%

40 TECH IS CHANGING JOBS First with Food Robots Revolutionizing Retail and Limiting Labor The 47% is already on its way Dining at Eatsa No visible workers Momentum Machines Burgers made by robots Amazon Go: grocery stores with no checkout (in 2017) Drone shipments??

41 Wheels next AUTOBOTS EXPECTED TO ROLL-OUT Self-driving cars are no longer a futuristic idea Estimated 10 million self-driving cars on road by 2020 Mercedes, BMW, and Tesla already selling self driving features Tech companies also pioneering self-driving cars; Google, now APPLE testing driverless cars on CA roads Hurdles to driverless cars are regulations, cost and fear

42 Changes Are Already Here AT LA S BIGGEST ECONOMIC ENGINE!

43 Eatsa; Woodland Hills, Los Angeles

44 Amazon Go; Seattle, WA

45 I-tailing & E-dustrial Takeaways 1. Box retail is #shrinking, right-sizing, closing (discounters are active) 2. #Food and #Place are today s anchor tenants 3. #CommunityRetail is key ingredient in the blending and mixing of uses 4. #Millennials drive and thrive on a digital and sharing economy 5. Retailers are embracing physical and online platforms to capture larger amounts of sales #Omnichanneling 6. Automation to shift job creation to top of public sector priority list #continuouseducation 7. #LastMileDelivery; City zoning/land use policies challenged to accommodate consumer demand

46 I Tail & E Dustrial has an E xciting future We re just not sure how it fits together YET

47 Discussion