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Wall Street Journal: Online Retail Gives Industrial REITs a Lift

According to The Wall Street Journal:  Investors in recent years have been ho-hum about online shopping’s potential as a growth engine for companies that own warehouses and distribution centers.

Now Wall Street is giving that a rethink.  Shares of real-estate investment trusts that own industrial space have soared 17.3% this year, compared with 6% for all equity REITs and 1.7% for the S&P 500, according to Green Street Advisors.

In 2015 and 2014, by comparison, industrial REITs underperformed the real-estate market by 0.6% and 9.1%, respectively, Green Street Advisors says.

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Analyst Eric Frankel said that is partly because e-retailers have needed to keep more inventory on hand as they promised customers shorter delivery times.

“People are saying ‘I want my shipment in one or two days,’” Mr. Frankel said. “That has an impact on inventory.”

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Mr. Frankel points out that demand for industrial space also may decelerate as internet distribution becomes more efficient. He notes that a huge online retailer like Amazon.com could “curb overall demand” by greatly increasing its offering of its logistics services to smaller retailers.

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To view the full article from The Wall Street Journal, click here.