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Many Happy Returns For Logistics Providers

Many Happy Returns For Logistics Providers
Thornton Crossing is a 2.3M SF distribution center being developed by Trammell Crow on behalf of an e-commerce company.

Holiday shoppers are ditching brick-and-mortar stores for the convenience of ordering gifts online, and the trend is creating opportunities in industrial real estate, according to a report from CBRE.

Adobe forecasts online sales will increase by 13.8% this holiday season to $107B, which could result in $32B worth of returns.

E-commerce is definitely a driving factor in Denver’s industrial market,” CBRE Senior Vice President of Industrial and Logistics Services in Denver Tyler Carner said. “As retailers both expand and adjust their supply-chain networks to better handle returns, we anticipate an additional boost to demand for distribution and warehouse space along the Front Range.”

Many Happy Returns For Logistics Providers
Tyler Carner says e-commerce is a driving factor in Denver's industrial market.

Historically, returns of store-bought merchandise have amounted to 8% of total retail sales. E-commerce returns range from 15% to 30%, depending on the product category.

Because returned merchandise adds significant costs to retailers and distribution networks, third-party logistics operators and facility owners are in a position to cash in on those returns. It is estimated that returns sold at discount or not resold cost retailers 4.4% of total revenue each year, which is encouraging many online retailers to outsource their reverse logistics operations to cut costs and gain efficiency, according to CBRE.