Ecommerce is Still on the Rise

A recent article about retail sales in the New York Times indicated that, while online retail--especially Amazon--had done very well during the pandemic, it still only amounted to about a quarter of retail sales.  That has some interesting implications for commercial real estate in Connecticut.

Given our location between Boston and NYC, and our high average income within the State, it stands to reason that, if ecommerce has not reached its peak yet, our warehouses, flex spaces, and raw land should do well in the future.  Distribution is the key to timely deliveries, and the ability to get something within a couple of days is a key factor in deciding whether or not to buy it online.  Whether goods are traveling further up into New England, or being delivered to homes around us, there will need to be warehousing available near our highways, railroads, and airports.  

Although our roads and bridges have been a challenge for trucks and overland traffic, Governor Lamont's call for a stronger focus on infrastructure, combined with President Biden's emphasis on the same, seem to point to a brighter future for distribution in and through Connecticut.  Smart buyers will begin to develop properties that have been languishing, and take advantage of changes coming down the pike (pun intended!).  Even if there is only a small continued shift toward home delivery, the amounts in question are enormous. Those developments should get filled, and provide income for the owners well into the next economic cycle.  

Commercial Real Estate Lags Nine Months to a Year After Residential

We all know that real estate sales go in cycles.  Buying at the top is expensive.  Buying at the bottom is lucky, but usually only known in arrears.  What we should think about now is this:  Commercial real estate activity usually follows residential patterns, but nine months to a year later.  So what do we know about the housing market in Connecticut now?  It's hot, hot, hot. And what does that tell you about waiting longer to purchase commercial space?  Do not, not, not! 

This is the time to lock in real estate, before a booming surge in new homeowners leads to a need for other kinds of real estate.  All those buyers will need furniture, cars, food, tools, and other things that come along with a new lifestyle or location.  We already know that restaurants and other entertainment locales are just waiting for spring and summer patrons.  But what about everything else that they haven't bought during the past year?  While it's true that ecommerce has filled a big part of people's needs, there will still be an uptick in bricks and mortar for all kinds of purposes.  

If the second Roaring 20s are going to hit us soon, why not position yourself to make money just through foresight?  Buy now, and reap the rewards as the economy recovers from the pandemic.  Your investment portfolio will thank you later, if you fill it with some commercial real estate now.