CBRE ECONOMETRIC ADVISORS Presents CHALLENGES VS OPPORTUNITIES IN THE RISE OF E-COMMERCE

Transcription

1 CBRE ECONOMETRIC ADVISORS Presents CHALLENGES VS OPPORTUNITIES IN THE RISE OF E-COMMERCE

2 INTERESTING QUOTE OR STAT 2 CBRE AMERICAS RESEARCH CONFERENCE 2016

3 OMNI-CHANNEL CHALLENGE VS OPPORTUNITY OMNICHANNEL

4 OMNI-CHANNEL RETAIL CHALLENGE & OPPORTUNITY

5 OMNI-CHANNEL: THE CHALLENGE ONLINE CHANNEL GROWTH CONTINUES TO EXCEED BRICKS-AND- MORTAR CHANNEL (Bil) $1,600 $1,400 $1,200 $1,000 $800 $600 $400 $200 $0 Total Retail Sales (L) E-commerce Sales (R) (Bil) $96 $84 $72 $60 $48 $36 $24 $12 $0 (%) E-commerce Sales as a Share of Total Retail sales Source: US Census Bureau 5 CBRE AMERICAS RESEARCH CONFERENCE 2016

6 OMNI-CHANNEL: THE CHALLENGE UPENDING HISTORIC SUPPLY AND DEMAND OF RETAIL SPACE? (MSF) 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 Retail Completions (L Scale) Retail Sq. ft. Per Capita (R Scale) (Sq. ft. per Capita) Source: CBRE EA 6 CBRE AMERICAS RESEARCH CONFERENCE 2016

7 OMNI-CHANNEL: THE CHALLENGE DEMAND FOR MORE FLEXIBLE LEASE TERMS 7 CBRE AMERICAS RESEARCH CONFERENCE 2016

8 OMNI-CHANNEL: THE CHALLENGE THE RISE OF ROGUE RETAILING 8 CBRE AMERICAS RESEARCH CONFERENCE 2016

9 OMNI-CHANNEL: THE CHALLENGE ARE WE DOOMED? 9 CBRE AMERICAS RESEARCH CONFERENCE 2016

10 OMNI-CHANNEL: THE OPPORTUNITY THE NEED FOR BRICKS-AND-MORTAR RETAIL HAS BEEN RE-EMPHASIZED Buy Online Pick up in Store Transport Home Buy Online Ship from Store Deliver Home Buy in Store Return Online Pick up/ Deliver Home Visit Store Purchase via Tablet Deliver Home 10 CBRE AMERICAS RESEARCH CONFERENCE 2016

11 OMNI-CHANNEL: THE OPPORTUNITY THE DATA AND MARKETS SEEM TO INDICATE THAT RETAIL OR THE TOP-TIER AND CERTAIN SEGMENTS ARE DOING JUST FINE Aug-06 NAREIT Equity REIT Total Return Indices (August 2006=1.0) Aug-07 Aug-08 Aug-09 Aug-10 Aug-11 Apartment Aug-12 Aug-13 Aug-14 Office Industrial Aug-15 Retail Aug-16 (%) NCREIF 10-year Average Annual Total Returns through Q Apartment Office Industrial Retail Source: NAREIT, NCREIF 11 CBRE AMERICAS RESEARCH CONFERENCE 2016

12 OMNI-CHANNEL: THE OPPORTUNITY IS PHYSICAL RETAIL HEADED FOR EXTINCTION? DON T BELIEVE THE HYPE 40% 30% 20% 10% 0% -10% E-commerce Sales Growth (year-over-year Change) Forecast ~10%? 100% 80% 60% 40% 20% 0% E-commerce Sales as a Share of Total Retail Sales Forecast Only 13% by 2026? Source: US Census Bureau 12 CBRE AMERICAS RESEARCH CONFERENCE 2016

13 OMNI-CHANNEL: THE OPPORTUNITY ADJUSTING TO THE EXPERIENCE ECONOMY Restaurant Grocery Retail Entertainment Department Stores Personal / Professional Online and Catalogue Discount Stores Electronics/Appliances Other Home Improvement Other Services 1% 2% 2% 4% 5% 5% 6% 6% 7% 7% 10% % OF SAVINGS FROM LOWER GAS PRICES SPENT ON NON-GAS CATEGORIES 18% Source: Deutsche Bank, JPMorgan Chase Institute 13 CBRE AMERICAS RESEARCH CONFERENCE 2016

14 OMNI-CHANNEL: THE OPPORTUNITY TENANT LANDLORD PARTNERSHIPS One team, one dream Examples: Restoration Hardware & Eataly 14 CBRE AMERICAS RESEARCH CONFERENCE 2016

15 OMNICHANNEL LOGISTICS DRIVING A SUPPLY CHAIN REVOLUTION

16 Retail Pre-eCommerce 2000 s Now PUSH PUSH & FULFILL CHASE DEMAND Retail: Store is full Minimal markdowns Retail: Right inventory in the right place Balance initial push vs. replenishment Retail: Right inventory, right place, right time Quickly react without disappointment Direct to Consumer: Weeks Slow, little communication ecommerce: 4-8 Days Moderately quick, consumer paid ecommerce: 0-3 Days Fast, Free and Convenient Industrial Real Estate Challenge: Industrial Real Estate Challenge: Industrial Real Estate Challenge: LOCATION OF FACILITIES NUMBER + + OF FACILITIES MISSION OF FACILITIES 16 CBRE AMERICAS RESEARCH CONFERENCE 2016

17 HIGH STRIKING THE RIGHT BALANCE Modern Big Box SCALE & INNOVATION Traditional Big Box Last Mile Retail Backroom Delivery Service LOW COST & PROXIMITY HIGH 17 CBRE AMERICAS RESEARCH CONFERENCE 2016

18 U.S. NET ABSORPTION RUNNING WELL ABOVE AVERAGE User demand has been broad, as occupiers look to extend their supply chain reach in as many markets as possible. As has been the case throughout the entire recovery, demand in Q ran well above the long-term average. E-commerce, food and beverage, and third-party logistics users led the way. Source: CBRE-EA, reflects averages from through Source: CBRE Econometric Advisors, Q CBRE AMERICAS RESEARCH CONFERENCE 2016

19 U.S. SUPPLY VS DEMAND NET ABSORPTION AND DELIVERIES AS PERCENT OF STOCK 4% 3% 2% 1% 0% -1% -2% -3% Completions Net Absorption Source: CBRE Econometric Advisors, Q CBRE AMERICAS RESEARCH CONFERENCE 2016

20 SAME-DAY DELIVERY SAME-DAY DELIVERY & THE LAST MILE THE LAST MILE CHALLENGE VS OPPORTUNITY CHALLENGE VS OPPORTUNITY

21 LAST MILE LOGISTICS CHALLENGES AND OPPORTUNITIES

22 WHO REALLY WANTS SAME DAY DELIVERY? MILLENNIALS AND PARENTS SHOW A PREFERENCE 22 CBRE AMERICAS RESEARCH CONFERENCE 2016

23 IT SEEMS IMPOSSIBLE SUPPLY CHAINS SEEM TOO BIG AND BROAD FOR THIS TO WORK Source: CBRE Global Supply Chain Services, June CBRE AMERICAS RESEARCH CONFERENCE 2016

24 RETHINK THE SUPPLY CHAIN THE SIZE AND LOCATION OF FACILITES HAS DIVERSIFIED 2-3 day coverage of entire country Big Box Centralized Distribution Centers 1 day and overnight delivery Regional Distribution and Fulfillment Centers Same day delivery Local Service Centers 24 CBRE AMERICAS RESEARCH CONFERENCE 2016

25 RETHINK THE SUPPLY CHAIN THE IMPORTANCE OF THE SMALLER PROPERTY HAS GROWN 2-3 day coverage of entire country Big Box Centralized Distribution Centers 1 day and overnight delivery Regional Distribution and Fulfillment Centers Same day delivery Local Service Centers Light Industrial 25 CBRE AMERICAS RESEARCH CONFERENCE 2016

26 SMALL WAREHOUSE AVAILBILTY WELL BELOW INDUSTRY AVERAGES <70,000 70, , , , ,000+ Total Source: CBRE-EA, reflects averages from through Q1 2016Q1 26 CBRE AMERICAS RESEARCH CONFERENCE 2016

27 LARGE VS SMALL WAREHOUSE CONSTRUCTION BIG BOX CONTINUES TO DOMINATE Underway Completions % Stock, < 120K Completions % Stock, 120K + Average < 120K Average 120K + Source: CBRE-EA, Q CBRE AMERICAS RESEARCH CONFERENCE 2016

28 SAME DAY DELIVERY CHALLENGE & OPPORTUNITY

29 SAME DAY DELIVERY: THE CHALLENGE 29 CBRE AMERICAS RESEARCH CONFERENCE 2016

30 SAME DAY DELIVERY: THE CHALLENGE PROFIT MARGINS PRESSURED AT MAJOR RETAILERS 2015 SOURCE: CAPITAL IQ 10% 8% 6% 4% 7.81% 7.75% 7.57% 6.02% 2% 0% 3.12% 2.87% 2.50% 1.79% 1.71% 1.42% 1.35% ULTA ROSS TJX BBBY TGT DKS JWN COST KR BBY AMZN 30 CBRE AMERICAS RESEARCH CONFERENCE 2016

31 SAME DAY DELIVERY: THE CHALLENGE 31 CBRE AMERICAS RESEARCH CONFERENCE 2016

32 SAME DAY DELIVERY: THE OPPORTUNITY 32 CBRE AMERICAS RESEARCH CONFERENCE 2016

33 SAME DAY DELIVERY: THE OPPORTUNITY MAYBE PEOPLE AREN T WILLING TO PAY FOR SAME DAY? Source: Alix Partners 33 CBRE AMERICAS RESEARCH CONFERENCE 2016

34 RETURNS & REVERSE RETURNS LOGISTICS & REVERSE LOGISTICS CHALLENGE VS OPPORTUNITY CHALLENGE VS OPPORTUNITY

35 REVERSE LOGISTICS CHALLENGE & OPPORTUNITY

36 REVERSE LOGISTICS: THE CHALLENGE 36 CBRE AMERICAS RESEARCH CONFERENCE 2016

37 REVERSE LOGISTICS: THE CHALLENGE 2 MILLION TONS (4 BILLION LBS) OF RETAIL RETURNS SENT TO LANDFILLS EACH YEAR $280 BILLION IN LOST REVENUE IN CBRE AMERICAS RESEARCH CONFERENCE 2016

38 REVERSE LOGISTICS: THE CHALLENGE (OR THE OPPORTUNITY?) FOR ONLINE SALES 77% 107% of net sale expected with direct delivery and exchange of net sale expected with in-store pick-up and return Source: ICSC 38 CBRE AMERICAS RESEARCH CONFERENCE 2016

39 REVERSE LOGISTICS: THE OPPORTUNITY CLICKS TO BRICKS IF YOU CANT BEAT THEM; JOIN THEM 39 CBRE AMERICAS RESEARCH CONFERENCE 2016

40 REVERSE LOGISTICS CHALLENGE RETAIL RETURNS ON THE RISE 8% Historical Retail 25-30% Ecommerce Retail 40 CBRE AMERICAS RESEARCH CONFERENCE 2016

41 REVERSE LOGISTICS CHALLENGE RETURNS DESTROY MARGIN 41 CBRE AMERICAS RESEARCH CONFERENCE 2016

42 REVERSE LOGISTICS OPPORTUNITY FOR THE USER 42 CBRE AMERICAS RESEARCH CONFERENCE 2016

43 REVERSE LOGISTICS OPPORTUNITY FOR INDUSTRIAL REAL ESTATE OUTBOUND Reverse supply chain creates more warehouse demand REVERSE 43 CBRE AMERICAS RESEARCH CONFERENCE 2016

44 RETURNS & REVERSE RETURNS LOGISTICS & REVERSE LOGISTICS CHALLENGE VS OPPORTUNITY CHALLENGE VS OPPORTUNITY

45 RETURNS & REVERSE LOGISTICS CHALLENGE VS OPPORTUNITY