CHICAGO—The remarkable expansion of e-commerce has been made possible by the high-tech features now common in class A distribution buildings. And consumers' use of internet shopping will most likely continue growing in 2018 and sustain demand for these modern fulfillment centers.

The market has created roughly 200 million square feet of demand each year for the past few years, and the coming 12 months will almost certainly see something similar.

“In my 25-plus years, I've never seen numbers like this,” Kenneth J. Szady, national director of North America and Canada for Marcus & Millichap's Institutional Property Advisors, tells GlobeSt.com.

However, although developers will continue breaking ground on new automated facilities, 2018 could see a significant change, Szady believes. For the first time in years, supply may exceed demand, and after a long stretch of stupendous growth, cause rents to moderate for a time.

“I'm not raising the flag of caution or pessimism,” he adds. Even compared to the peak year of 2007, user demand will remain quite strong, and that will keep the gap between supply and demand rather narrow.

It will also likely be temporary. The modern warehouse is simply too valuable to e-commerce users. “Automation has made the delivery systems so much more efficient,” Szady says. It has lessened the need for physical labor, and how distributors use space has improved dramatically. Robot devices can quickly locate, pick and place individual orders onto conveyor belts that lead to delivery trucks. As a result, users can stack product higher than ever.

In the old days, items had to be in reach of a forklift, leaving 20% to 30% of a building's cubic volume empty and unused. Today, automation allows a 500,000-square-foot building to reach 36' or even higher, and all of the space gets used.

These facilities are playing an increasingly important role in the US economy. As people buy more things online, brick-and-mortar retail has taken a terrible hit, with many stores shrinking or closing. And the work of getting the product to someone's home on the same day, or even in the next hour, now takes place elsewhere. “Retailing out of distribution centers and warehouses is becoming dominant,” Szady says.

Although high-tech tools help distributors get this work done efficiently, access to labor continues to be extremely important. “The skill levels needed have gone up dramatically,” Szady says, and users need to choose their locations with care.

“There's a lot of discussion about robots replacing labor – while the jobs may be different and there will likely be fewer of them, the reality is labor will always be critical to the industrial sector,” says Bob Smietana, vice chairman and chief executive officer of HSA Commercial Real Estate. The Chicago-based developer recently opened a number of new distribution buildings in Indianapolis and Nashville. “On average, warehouse employees will change jobs for as little as a 75-cent hourly wage increase or slight cost savings on housing and transportation. This means location still matters, even as some warehouse operations become all or partially automated.”