Exploding online sales and a three-in-10 return rate mean industrial real estate finally feeling the love

Amazon’s purchase of Whole Foods is expected to add to the pressure for warehouse and distribution space

Bananas are the Holy Grail of online delivery, the one thing that’s almost impossible to perfectly ship to someone’s doorstep after being ordered.

“They are so finicky,” said Ben Conwell, a Seattle-based senior managing director at real estate company Cushman and Wakefield Inc. and leader of its e-commerce fulfillment division. “They can’t be too cold, they can’t be too hot, they bruise like the dickens and they have a limited shelf life.”

That’s why everybody in the fast-growing world of logistics, which has created an unprecedented demand for industrial space across North America, is watching how online giant Amazon.com Inc.’s US$13.7- billion purchase of upscale grocer Whole Foods Market Inc. plays out.

“There is nothing more difficult to fulfill than perishables,” said Conwell, who predicts Whole Foods, which has 13 locations in Canada, will help Amazon with distribution even though online food sales are a paltry one per cent of the grocery business and Amazon Fresh has struggled south of the border.

The online grocery business struggles partly because you can’t return that brown or bruised banana and a key element of the e-commerce revolution has been the ability to send anything back — a process called reverse logistics in the industry. Industrial space is already rapidly expanding to meet that finicky customer demand and could soar if online grocery buying ever takes off.

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