CHICAGO—Consumers' use of e-commerce to fulfill their shopping needs has not only shaped the retail sector, it has also caused a seismic shift in the industrial market. Online sales hit $394 billion in 2016, according to Forrester Research, and will rise to $591 billion in 2020 as retailers look to further reduce delivery times. That has sent demand from distributors for a new generation of buildings that can handle this product flow, and experts say this trend will continue in 2017 and beyond.

“Today's consumers are not only making more of their purchases online, but also expecting them to be delivered in a matter of minutes or hours rather than days,” says Bob Smietana, vice chairman and chief executive officer of HSA Commercial Real Estate. “This so-called 'Amazon effect' is fueling industrial leasing and development activity, particularly in distribution hubs with road, rail and runway access, resulting in record-low vacancy rates and rising rents in many markets.”

The US industrial sector has registered 27 consecutive quarters of net occupancy gains, according to a recent report from Cushman & Wakefield. At the end of the third quarter of 2016, vacancy had fallen to just 5.6%, a year-over-year drop of 90 bps, tracking a full 280 bps below the 10-year historical average. And industrial rents increased in 66 of 79 markets tracked by C&W from the third quarter of 2015 to the third quarter of 2016, with over 40% of the country reporting double digit gains. In many markets, industrial rents are now at historic highs.