E-Commerce Sales Advance 14.3 Percent, Strengthening Industrial Demand

Bobby and Lindsey
Published on March 14, 2017

E-Commerce Sales Advance 14.3 Percent, Strengthening Industrial Demand

Economic growth remained positive in the fourth quarter of 2016, but momentum slipped from the upbeat pace of the third quarter. Real gross domestic product (GDP) advanced at an annual rate of 1.9 percent, according to the Bureau of Economic Analysis’s first estimate.

The fourth quarter increase in economic activity stemmed from moderately positive contributions across most of the main GDP components. Net exports offered the only exception—experiencing the impact of a strengthening dollar. The 4.3 percent decline in exports coupled with the 8.3 percent jump in imports led to a negative contribution to quarterly GDP.

Consumer spending—the main driver of GDP—continued on an upward swing for the 28th consecutive quarter. Personal consumption rose at an annual rate of 2.5 percent in the fourth quarter. Benefitting from the traditional holiday season, the fourth quarter experienced solid gains in durable goods spending, especially cars and light trucks (up 11.8 percent), as well as recreational goods and vehicles (up 16.2 percent). Consumers also spent more on furniture and durable household appliances (up 4.0 percent).

Consumers continued their shift toward on-line purchases in 2016, driving demand for distribution centers. Retail e-commerce sales totaled $102.7 billion in the fourth quarter of the year, a 14.3 percent gain compared with the same quarter of the prior year, according to the Census Bureau. E-commerce sales represented 8.1 percent of total retail sales.

The first quarter employment landscape offered a few high points. Payrolls rose at a solid pace, adding 4495,000 net new jobs. In a nod to the rising profile of electronic commerce and demand for industrial properties, transportation and warehousing gained 39,100 net new employees, the strongest quarterly gain of the year for the sector.

Benefiting from the growing economy and continued gains in e-commerce, the industrial sector posted solid performance figures in the fourth quarter of 2016. Industrial net absorption totaled 47.0 million square feet, marking the 27th positive demand quarter, according to CBRE. Industrial developers tightened the gap between supply and demand to its closest level of the cycle, as new completions totaled 44.7 million square feet. As demand continued outpacing new construction, industrial vacancy dropped to 4.9 percent. Industrial rents advanced 6.3 percent on a yearly basis—the highest level since 2007—to an average of $6.58 per square foot.


Commercial fundamentals in smaller markets strengthened during the fourth quarter of 2016. Leasing volume advanced 2.5 percent from the prior quarter, as leasing rates rose by 3.1 percent.

Tenant demand remained strongest in the 5,000 square feet and below segment, accounting for 87.0 percent of leased properties. Demand for space in the Under 2,500 square feet segment increased in the last quarter, capturing 46.0 percent of responses. Demand also rose for properties in the 50,000 – 100,000 square feet segment and for those in the Over 100,000 square feet.



To access the Commercial Real Estate Outlook: 2017.Q1 report visit http://www.realtor.org/reports/commercial-real-estate-outlook.

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