The dramatic increase in the number of shoppers purchasing goods online continues to drive demand for warehouse and distribution space in the northeast. According to Census Bureau estimates, e-commerce now accounts for more than 8% of all U.S. retail sales, a near doubling of e-commerce’s retail market share in five short years. With internet shopping becoming the new norm, customers expect shorter and shorter delivery schedules. Speedy delivery options, such as same-day shipping, can create a competitive advantage in the New York metropolitan area, but retailers can only capitalize on that advantage if goods are stored close to their final destination.

Enter the modern warehouse and distribution facility in northern New Jersey. With millions of affluent residents and easy access to Manhattan, this area is the perfect location for retail operators to establish a warehouse and distribution center. The problem is that existing, vacant warehouse space is not so easy to find in a competitive market that’s highly regulated and over-developed.

According to The Wall Street Journal, certain savvy owners, developers, and redevelopers have already recognized the shortages on the supply side and are converting large office buildings into big box warehouse space. Vacant properties with good access to major highways, perhaps underutilized due to environmental, zoning or other constraints, also offer high upside potential.

Of course, transforming an office building or vacant property into a brand new, fully-leased warehouse facility is not without its challenges. Stay tuned for our legal analysis on the benefits and barriers to successfully developing new warehouse space from vacant or underutilized property in future blogs.

Andrew J. Camelotto is an Associate in the Gibbons Real Property & Environmental Department.