The effects of E-commerce on the demand for commercial real estate

Abstract

Shopping online as an alternative to in-store shopping can make much of traditional retail less attractive. There exists an obvious relationship between e-commerce and the demand for commercial real estate that accommodates physical retail shops. Substantial evidence supports the idea that the demand for physical shops has been affected by the rapid development of e-commerce in China. In order to better understand the sustainability of the commercial real estate market in a context of rapidly developing e-commerce in China, this study seeks to clarify the relationship between e-commerce and the demand for commercial real estate. Methods of inductive and comparative analysis are adopted. The findings show that from 2009 to 2013, the slowing growth rate of commercial property sales and the accelerating vacancy rate of commercial properties are closely related to the dramatic growth of e-commerce. We also found that different forms of commercial properties–supermarkets, department stores and shopping centers–are differently affected by the rise of e-commerce. However, due to the respective advantages and disadvantages associated with online and offline shopping, physical stores will not be completely eclipsed by virtual retail shopping.