How Amazon and Same-Day Delivery Will Effect Retail Commercial Real Estate

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How Amazon and Same-Day Delivery Will Effect

Retail Commercial Real Estate by:

Ryan Mitts

FIN 5433

Dr. Tony Ciochetti

03/30/2013

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TABLE OF CONTENTS

EXECUTIVE SUMMARY....................................................................................Pg. 1

INTRODUCTION.................................................................................................Pg. 2

THE STATE OF RETAIL REAL ESTATE.........................................................Pg. 3

THE THREATE OF E-COMMERCE TO RETAIL REAL ESTATE..............Pg. 4

IMPLICATIONS OF SAME-DAY DELIVERY.................................................Pg. 7

THE FUTURE OF RETAIL REAL ESTATE.....................................................Pg. 9

CONCLUSTION...................................................................................................Pg. 11

REFERENCES......................................................................................................Pg. 12

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EXECUTIVE SUMMARY

Real estate throughout the world suffered a huge shock during the financial downturn of

the late 2000's, and while the vast majority of other sectors are on the mend, the retail sector still

seems to be having a bit of trouble getting back to where they were before the crash. A large

reason for this has to do with Amazon and other online retailers taking up a larger and larger

share of the available sales forcing many companies into rethinking their business plan, leading

to store closures, downsizing, and even bankruptcies. The companies that do seem to be

adapting to the new world of internet commerce, have adopted plans that require not just fewer,

but smaller stores. This has left a huge hole in many shopping centers that may never recover in

this new economic reality.

How these giants of retail have been humbled by what started as just another internet

startup during the dotcom boom is amazing in retrospect. Amazon has figured out a way to

upend the system, doing away with the need for physical stores and the incredibly high costs of

real estate and hiring employees to man all of those stores. Amazon, and other online shops,

have been able to break so strongly into the market partially because of their ability to offer the

same products at a lower cost, and even the products which cost the same, came sales tax...