5 Ways Last-Mile Logistics Can Still Improve in 2019

As the holiday season makes a swift exit, many can relish in relaxation. It has become increasingly stressful to holiday shop; especially for last-minute gifts, as e-commerce and online retail has transformed the way we shop during the holidays as well as all year round. The hope that your package will get you to on time, by its expected delivery date is something that Amazon, Walmart, and other e-commerce and online retailers have yet to perfect. These last-mile logistics still have ways to improve to provide customers with the instant gratification of traditional retail shopping.

Let’s take a look at these 5 ways last-mile logistics can still improve in 2019 and beyond.

1. Create More Distribution Centers

Online retailers will have a need for more distribution centers, specifically ones that are located in areas where there is a great need for same day fulfillment. Amazon, a frontrunner in e-commerce innovation has set up fulfillment tents in vacant lots over the holiday seasons. Taking steps to get distribution centers into more urban locations with limited space is a way improvement can be made in last-mile logistics efforts.

2. Utilize Technology

Using Technology to enhance last-mile delivery and fulfillment can be extremely useful to e-commerce companies. Drones can be used to deliver packages even during holidays when most people are off. Robots have been implemented in many warehouses to allow warehouses to operate without human employees. These robots can work harder and longer. In fact, they have been being used in China to combat the fact that people no longer want to work the strenuous warehouse jobs. This allows warehouses to be more automated. With advancements and fine-tuning of this technology, it can continue to improve the way we receive shipments.

3. Laws Need Updating

Did you know there was a law that prohibits companies other than the USPS to deliver directly into mailboxes? This law was enacted in the 1930s and is incredibly outdated. If laws like these reformed, other companies could deliver more efficiently and securely.

4. Upgrades to Security

Speaking of secure deliveries, package thieves are becoming more prevalent in all areas of the U.S, specifically during the holidays. With new innovations to porch and package security options, e-commerce companies could save millions in losses per year. Implementation of delivery lockers for companies other than just Amazon could also provide a solution to thievery.

5. Continued Research

In a more general sense, continued research regarding new, undiscovered ways to increase the productivity of last-mile logistics and improve e-commerce is needed. Companies can hire great minds in fields such as technology, engineering, mechanics and science to come up with new advancements. As we see with companies like Amazon who often are on the cusp of new innovations, other companies soon follow suit. If companies remained competitive, it is possible the best idea may have not even been thought of yet.

As we enter 2019 there is always room for improvement, let’s see what will change by 2020 in regards to last-mile logistics.

Read More: https://www.cbcworldwide.com/blog/5wayslastmilelogisticscanstillimprovein2019

Stadiums Turn to Lifestyle Centers for Inspiration

Once upon a time, when a sports stadium was built, the focus was on the game. Though builders would include restrooms and eventually concession stands, distractions from the sport at hand were seen as “minor-league.” Fast forward to present years, stadiums are now entertainment experiences and designers have turned to lifestyle centers for inspiration.

No longer just a stand-alone structure, looming in a too large parking lot — they have amenities such as restaurants, hotels, shopping, clubs, kid zones and more. But how did we get to this point, and why has this trend become so successful?

The Parallels

As a society we are constantly inundated with stimuli, we are always connected and always entertained. Gone are the days where the sporting event was the sole form of entertainment. Sure, for fans and sports enthusiasts simply seeing the game may be enough; however, people wanted more. Some men and women just can not bear to sit through an entire sporting event and don’t even get started when mentioning kids. So, enter the idea of lifestyle-based sporting arenas. These structures span throughout various types of sporting venue whether it be basketball, football, soccer, hockey, or baseball. They have been elevated to create a more luxurious experience that is well rounded for many types of people.

You can now visit a sporting event and dine in a highly rated restaurant, shop at a luxury retailer, or visit a club behind home plate. Kids can enjoy activities and areas created just for them. This creates a more community feel and encourages different types of people and entire families to go, opening the doors to profits from more than just die-hard sports fans. It creates interest for many rather than few. Considering you must endure traffic, long lines and often expensive ticket prices to visit one of these events, this evolution into more than just sports was extremely necessary.

Taking it Up a Notch

Some stadiums have taken this vision and stepped it up a notch. The Miami Marlins baseball stadium have specialty food items that have a cult following, are uniquely “Miami” and can’t be purchased anywhere else. The Dallas Cowboys football stadium in Arlington, Texas is known as extremely flashy, and a pure representation of the Cowboys’ brand. In fact, you can tour the entire facility for under $30. Tourists come by the thousands to do this. Many even sneak in ministers, who marry them on the field in a sort of covert wedding ceremony.

When combing these quirks, experiences and entertainment options coupled with the excitement of sports (if you are a fan or even slight enthusiast) it creates something different for everyone, each time. The memories made by people when they visit these stadiums is one of the valuable commodities that keep them coming back. However, it is up to developers to keep these structures exciting, and current so that they remain interesting and profitable for guests now and in the future. We can only imagine what stadiums could develop into in the next decade, and it remains an exciting thought considering how far they have come thus far.

Read more: https://www.cbcworldwide.com/blog/stadiumsturntolifestylecentersforinspiration

18 Commercial Real Estate Trends To Dominate In 2019

1. Opportunity Zones Craze To Persist

As investors await finalized guidance from the Department of the Treasury and the IRS regarding the Opportunity Zone program, the hunt is on for assets and investment opportunities in these designated areas that present the strongest upside potential. Investors are lining up to pour billions into Opportunity Zone Funds, with a report from Real Capital Analytics stating there is more than $6 trillion in unrealized capital gains eligible to be deployed into opportunity zones. 

While the program was created through the passing of the Tax Cuts and Jobs Act last year to drive economic development in underserved communities in exchange for a hefty tax break, research reveals many of the census tracts classified as opportunity zones have already attracted a substantial amount of investment prior to the launch of the new federal program. Critics of the program worry it will accelerate investment in areas already experiencing a surge in development activity, leading to a convergence of investment into burgeoning neighborhoods already in high demand, and a lack of investment in otherwise blighted communities. 

2. Industrial Boom To Continue Thanks To High Demand From E-Commerce Players, Though A Few Headwinds May Surface

Industrial real estate demand soared to new heights this year, and CBRE Head of Industrial Research David Egan expects more of the same in 2019.

“I think the market has outperformed this year, at least from user activity. There has been a general expectation for a number of years that this can’t continue, and it turns out that hasn’t been true. We have a massive amount of demand on the market for logistics properties of all types; obviously the Class-A big-bulk warehouses are what get most of the attention, but the demand is very broad-based and extending all the way down to secondary and tertiary markets,” he said. “My expectation in 2019 is that we should see more or less of the same dynamic.”

Net absorption is expected to average between 75M SF and 94M SF, same as this year, according to CBRE's 2019 Outlook report, and a lack of new supply has driven vacancy levels down to 4.3%, a historic low. 

“Based on the demand that we're seeing from the e-commerce sector — as well as from traditional brick-and-mortar retailers that are entering or expanding in the online space — we can fully expect that e-commerce will continue to drive the market next year,” Bridge Development Partners President Anthony Pricco said. “This is especially true for infill sites proximate to the major population centers. While the rising costs of land and construction could be viewed as emerging market headwinds, the upside of industrial development is still exceptionally strong, as rents have been appreciating at an even faster pace.”

Egan told Bisnow he would not be surprised if net absorption tapered off in 2019 due to new supply not keeping pace with robust demand levels.

“You can only absorb what’s available,” said. "While we expect to see supply-demand relatively in check, those growth metrics will still be positive.”

3. Federal Reserve To Gradually Boost Interest Rates Due To The Strength Of The Economy

With robust jobs growth continuing to increase at a healthy clip and the unemployment rate steady at 3.7%, a 50-year low, Fed officials hint that they will likely continue their course of action in 2019 to gradually boost short-term interest rates to temper inflation and maintain a stable economy.

“Inflation exists above the Fed’s target of 2% to 2.5%, with more job openings than unemployed and more homebuyers than new housing inventory. The Fed sees inflation ahead first and foremost and will continue on a hike-pause-hike-pause pattern in 2019 as long as GDP remains above 2.0% and unemployment below 5%,” CCIM Institute Chief Economist K.C. Conway said.

The Fed boosted rates three times this year to a range of 2% and 2.25%, and many expect central bankers to bump rates again in December. Big Wall Street banks polled by Reuters expect central bankers to boost rates another three times in 2019.

“Although the most recent Fed guidance has seemed less definitive on its future course, the market and most analysts anticipate another hike this month and two to four next year, as both inflation and wage growth exceed their targets,” Colliers International U.S. Chief Economist Andrew Nelson said. “This will ultimately translate into declines in consumer and business borrowing and curb spending and investing.”

TO READ THE REST OF THE TRENDS CLICK THE LINK BELOW:

https://www.bisnow.com/national/news/commercial-real-estate/commercial-real-estate-trends-to-dominate-in-2019-95890

Cap Rates Simplified - Market Value of Income Producing Properties

Do you know how to value income producing property? Let’s say you have a small office condo that you want to sell, and need to determine the value.  If there are recent sales of comparable condos, then it’s fairly easy to figure out.  But what about a ground lease of vacant commercial land?  

You’ll hear a lot about the “cap” rate and you will need a fairly good understanding of what the cap rate means to arrive at the market value of your land.  First, you’ll need to make sure there really is some demand for the land.  This usually happens in densely populated areas where most vacant parcels are already developed and land prices are very high.  For example, in a big city along a high traffic roadway.  Alternatively, large vacant parcels outside the densely populated areas may be suitable for a ground lease when the cost to buy and build is beyond a user’s budget.

Remember, a new ground lease is when the owner leases vacant land and the lessee (tenant) constructs their own building on the land.  The lessee controls the building and the land, and pays rent to the landowner for the entire term of the ground lease.  The tenant usually also pays the real estate taxes on the land and improvements. 

Even after the tenant constructs their building, the landowner can still sell the land, it’s just encumbered by a lease - which adds value to that land because it’s income producing property that requires virtually no maintenance or management.  The tenant owns and operates the building and the grounds.  The only management required is making sure the real estate taxes are paid, which is usually the tenant’s obligation but should be verified annually by the landowner.

So, to value this ground lease, you would apply a capitalization rate “cap” rate to the annual net operating income generated by the ground lease.  So, let’s assume the rental income is $2,000 monthly for the next 50 years (long term ground leases are common).  The annual income is $24,000 if the ground lease has a triple net structure (NNN).  So which cap rate to apply?  Let’s start with basic math here.  Say you heard a buyer was looking to pay for property with cap rates of 7 to 8 percent.  You could determine what price to charge that buyer based on his requirement by dividing 24,000 by 7 or 8 percent.  The sale price would be about $343,000 if the cap rate is 7% and $300,000 if the cap rate is 8%.  So, from a buyer’s perspective, the higher the cap rate, the lower the purchase price.  That’s why you’ll see sellers advertising well located income producing property with high quality tenants on long term leases at cap rates of 4% to 6% in a strong market.  And you’ll see buyers asking to buy properties at cap rates of 6% to 8%.  

Up next, how to determine the cap rate for your property from recent sales.

For more information, contact Sally Marks at 904-349-5192.