_The future trends shaping Chicago, Delhi, Kuala Lumpur & Bangkok
In Chicago, the rise of e-commerce coupled with Americans’ preference for speedy deliveries has created unprecedented demand for distribution centers and logistics real estate.
The demand for same-day or next-day delivery has helped drop the vacancy rate to new lows while causing construction starts to skyrocket.
E-commerce has accounted for several of the largest transactions completed in Chicago in the last 18 months, with Amazon completing 4.4 million sq ft in deals.
Online retailers require more distribution space than traditional retailers, because they need to individually package single items. Historically, e-commerce distributors have demanded massive, single locations, but with the promise of faster delivery times the single warehouse model is becoming inefficient.
Future demand for industrial space will come from the ‘last-mile’ fulfilment centers that are located along major highways and have sufficient loading dock infrastructure. These fulfilment centers will be key to establishing delivery networks that allow online retailers to achieve delivery deadlines.
Amy Binstein, Research Manager – Chicago Newmark Knight Frank
Traditionally, Delhi has been an amalgamation of shopping streets and malls, but the latest addition to its retail landscape is the rise of internet shopping that is taking the capital by storm.
Delhi has an internet user base of 12.1 million making it a ready destination for online retailers. Coupled with this, factors such as favourable demographics and a fast-paced lifestyle have added to the attractiveness of the ‘click-and-sell’ model.
Online retail and physical shops are mutually supportive; as online shopping offers convenience and discounts, while shops allow the customer to experience the goods. This is leading to the synergy between modern malls and internet shopping in Delhi.
Brands such as H&M, GAP, and Nike offer multiple touch points to customers and see internet shopping as a natural extension of their offline business in malls. This ground shift in the buying pattern of the populace, points towards a paradigm shift in the retail market.
Ankita Sood, Lead Consultant, Research & Advisory Services, Knight Frank India
The public transport network serving Greater Kuala Lumpur (GKL), home to more than 8 million people, at about 45 km rail length per million people is comparable to that of Singapore and Hong Kong.
The 51 km Sungai Buloh-Kajang mass rapid transit line (MRT Line 1) provides interchange with the light rail transit (LRT), KL Monorail, KTMB Komuter, and KLIA Express lines. GKL’s connectivity is set to improve with additional rail lines totalling 130 km in the development pipeline or proposed.
Thanks to the expanded transport infrastructure, decentralised office locations such as Kuala Lumpur Sentral, Damansara Heights, Bangsar South and the Taman Tun Dr Ismail – Bandar Utama – Mutiara Damansara corridor, continue to draw interest from local and multi-national occupiers.
There is also a rise of transit-oriented developments (TODs) and emerging property hotspots in GKL. Moving forward, the Kuala Lumpur-Singapore High Speed Rail (HSR) project is a game-changer for the two countries.
Judy Ong, Executive Director – Research Knight Frank Malaysia
E-commerce has transformed the retail landscape in Bangkok, however bricks and-mortar stores will stay. To maximize the efficiency of their existing physical stores, we expect to see retailers growing sales via a multi-channel strategy, where offline and online stores support each other.
Retailers that are smart at balancing and optimizing the customer experience across channels are the ones that are winning.
This is why we are seeing so many examples of online retailers that are now opening physical stores.
E-commerce is also generating more demand for office and warehouse space, as online firms have expanded aggressively, acquiring offices and warehouses to operate from. Technology is likely to evolve at a faster pace and continue to transform the lifestyle of people.
Technological advances will allow people to bypass existing infrastructure and developmental constraints, and the impact on real estate is likely to be positive as well as transformational.
Risnee Sarikaputra, Head of Research and Consultancy, Knight Frank Thailand