Warehouses will pay a key role in commercial real estate in the coming decade. The predictions for real estate growth as we head into the new decade and specifically into the  2020 fiscal year have had one word in common…growth. Both commercial and residential real estate are predicted to continue to grow, albeit in a slower potentially cautious way as we watch the global markets adjust to political turmoil throughout the world. Commercial real estate will change based on the demand for new  and evolving technologies, the ageing of the baby boomer workforce and the diversity of investors. Commercial real estate encompasses a large, diverse market. New technologies are expanding that market by adding new needs and flexible uses for existing markets.

Cold Storage

The growth of e-commerce has increased demand for warehouse space exponentially, but one subset of that real estate sector this is seeing real growth is cold storage. Cold storage warehouses and distribution centers are suddenly in high demand thanks to new food delivery services such as Blue Apron as well as the changing of eating habits of Americans. The demand for more organic and farm to table products increases yearly and storage of these items is proving a growing market. The prediction is that in the next 2 years, online grocery shopping will add an additional $100 billion in annual sales. This means a big change in cold storage as well as the technology which supports the industry.



Robotics and automation in the distribution process will also have an effect on the commercial real estate market. The size of distribution facilities is based upon their intended use, with import distribution centers favored by national retailers usually 500,000 to more than 1 million square feet. E-commerce fulfillment favors smaller facilities located closer to the core urban areas, such as Chattanooga’s Amazon distribution center located in Ootewah. The biggest year-over-year growth in new supply in the coming year will occur in the 100,000-square-foot to 300,000-square-foot segment of the market. Online shopping will continue to feed the need for distribution centers.




Cryptocurrency and the use of blockchain process (encryption) is on the rise. The storage of the bitcoin miners is creating a demand for unique real estate uses. Currently, warehouses, data centers, basements of buildings and even old shipping containers are being utilized as storage for the more than 1.14 million bitcoin miners in production. The use of energy and passive space is growing, with the estimation that bitcoin mining uses as much electricity  world wide as the entire country of Switzerland. There is plenty of opportunity as this industry continues to grow for investors and property owners to turn real estate that may not be ideal for other uses as a cryptocurrency rent producer.



Overall, warehouses continue to be a sound commercial real estate investment. The Chattanooga and North Georgia areas have a short supply of less than 3 dozen listings currently on the market. For more information about commercial real estate trends contact Lisa Brown, lisabrown@kw.com