THE CHANGING FACE OF INDUSTRIAL:

HOW THE LOGISTICS MARKET IS BEING IMPACTED

BY ECOMMERCE AND OTHER TRENDS

Land & Development Conference 2016

Clicks to Bricks

Recent Store Closings / Restructuring

Expanding Online Retailers

Expanding Large Format Retailers

The Supply Chain Model

First Mile Distribution Hub Last Mile

• Mega DC • Connecting sea ports to intermodal hubs • Sears Canada Vaughan DC

• Cross-docks • 150,000 – 250,000 SF • Costco Brampton DC

• Urban warehouse fulfillment centres • Close to roof tops • To support swift response times – same

day delivery • Walmart Etobicoke DC

E-Commerce

• Growth in e-commerce sales is 5x greater than traditional retail

• On-line buying visits grow 10x more than brick and mortar locations

E-commerce Influencers

“Get Local”

1. Click to Doorbell: Instant

gratification

2. Speed of Delivery: Delivery

expectations

1. Fast for 2013 was 4 days

2. Fast for 2014 was 3 days

3. Fast for 2015 was 2 days

4. Fast for 2016 is next day

5. Expectation 2017 is same day

3. Always Open: Shop when/where

you want

E-commerce Impacts

1. Individual retailers cannot match

Amazon’s “Get Local” capability

2. Less square footage of retail space and

more square footage of logistics space

3. Substantial increase in e-commerce

fulfillment centres in large cities

4. Substantial increase in the e-commerce

click/collect in small cities/rural

5. Increase in need for reverse logistics

Real Estate Challenges

Business Concerns

Changing Existing Building Operations

Portions of warehouse converted

to e-commerce fulfillment

Real Estate Challenges

Business Concerns

Speculative Development Trends & Concerns

Adaptability of site designs

• Site Coverage - high requirement

for trailer parking, and employee

parking impacting site density

• Power Requirements – Energy

intensive pick & pack operations,

conveyers will require large power

• Building Design – Decrease in

truck level doors and increase in

van level doors Oxford Airport Business Park, Calgary

Industrial Market Sector Disruptors

• Who is going to come out ahead?

• What do you see as threats to the market?

• Where will new development be located?

• Will occupiers pay more for space that truly fits their needs?

Same Day Delivery Internalizing Supply Chain

Thank you