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ProLogis Kingspark Developments last month secured leases for the development of 728,000 sq ft of two distribution warehouses by virtual bookseller Amazon.co.uk.The massive buildings are to be used as warehouses for the distribution of Amazon’s books. The largest unit is roughly the size of three football pitches placed end to end.The move from Amazon’s current site in Slough will happen towards the end of this year, as the units are being developed to specific requirements by ProLogis. Edge Ellison received instructions from ProLogis in mid-April and met with Cameron McKenna, Amazon’s solicitors, in early May. The two agreements for lease were exchanged on 21 May. With the increased capacity that Amazon now boasts, it can stock a wider selection of books and deliver to the customer more quickly than before. In fact, the development will increase stocking and shipping capacities to more than 12 times the current level.With e-commerce booming, it is critical for companies like Amazon to be strategically located at key transportation sites to enable efficient distribution.The new site has the facility for a rail link to be connected as it abuts a main railway line.ProLogis managing director John Cutts says the deal illustrates the demand for strategically located industrial property by traditional and start-up e-commerce retailers.“By creating build-to-suit facilities we can provide the facilities needed to meet the service requirements of internet retailers,” he says.There are numerous questions hanging over the future of traditional retailing in the UK, but the impact of internet shopping for the property market is clear – lower demand for retail space but higher demand for warehouse space.The inherent market contradiction is that while the Internet tends to disperse and decentralise human activity, the value of real estate stems from the economy’s need to concentrate and centralise this activity. Therefore, by taking sales away from store-based retailers, the Internet will reduce the underlying value of property. In the long term, rents and values will be depressed by internet shopping.Property agent Jones Lang LaSalle is studying the implications of online shopping with interested parties across Europe, testing current assumptions about the property market and indulging in ‘what if ?’ scenario planning.Research firm Property Market Analysis was recently hired by a group of Oxford Street landlords to examine the profile and opinions of shoppers who use the area. The cost, exceeding £100,000, was small price to pay, as landlords are increasingly aware of the threat posed by burgeoning out-of-town retail centres and online shopping.Despite the growth of e-commerce, Edge Ellison property clients are seemingly not hesitating in their pursuit of property-based expansion plans. The firm’s portfolio of retail clients is still signing medium- and long-term leases.Perversely, many large retailers are actively pursuing web-based sales strategies at the same time.This, ultimately, means a threat to the high street. The next 12 months will see changes in the way the UK does its shopping.A new report from investment bank Goldman Sachs says that 15%-20% of the global market could eventually be captured by the Internet. So far the major growth in e-commerce has been in the US, but the UK, with its strong transatlantic telecommunications, could be the hub of Europe’s internet economy. Some 11,000 new people go online each day in Britain. NOP, the research company, believes 43% of the population will be online by the millennium.Analysts estimate that western Europe’s e-commerce business will be worth £11.8bn this year, and that within three years the figure could reach £139bn. These figures are small, however, when compared to the US. Revenues there are expected to reach £70bn this year, growing to £554bn by 2002.Britain lags behind not just the US, but a number of European countries when it comes to internet penetration. The stumbling blocks cited for this are the UK and Europe’s failure to embrace the Internet and the head start that the US market has enjoyed in the past.Verdict, the retail research consultancy, found that 43% of the UK’s top 100 retailers have websites, but only 14% of them allow transactions to be carried out – but consumers can buy from the websites of the top 100 US retailers.There are also cultural and lifestyle factors explaining the UK’s lagging performance.The UK has lower personal computer use; less credit card use; a costly local telephone system (the majority of local US calls are free); a slower distribution and postal system; and language barriers to bypass in Europe.The largest losers will be smaller independent retailers who fail to embrace the Internet. It is they who will be unable to compete with the range and service offered by online businesses. Another sector that will fall prey to the e-commerce pioneers are those retailers who offer a product or service where there is a large price differential between different countries. Music retailers and car dealers both fall into this category.Autobytel UK, the British arm of the biggest net service for buying and selling new and used cars attracted 10 million visits to its web site in its first month. Research suggests that cars are ideally suited to selling on the Internet.A recent US study found that 85% of people who went through a full search of a car website bought a car within the next three months.The conversion rate from visits to sales in a car showroom is 20%. Autobytel and its main rival Autoweb generate in excess of £16m in car sales per day.The net allows buyers to hunt for cars, compare prices and read reviews while bypassing the car salesman, who is often seen as untrustworthy and likely to employ high-pressure sales tactics.However, it would be too simplistic to conclude from all of this that companies such as Amazon and Autobytel will, through the development of their businesses, fundamentally change the face of the high street.Why has the same excitement not taken place of late in linking catalogue retailers with developments in telephone ordering and telephone banking systems? The simple truth is that people remain concerned about the size, look and feel of the product they are buying. Also, while the ordering concept sounds ideal, the receipt of deliveries is problematic and the inconvenience of dealing with returns is another disincentive.Additionally, the instant conclusion that goods will be cheaper when purchased online does not automatically follow, given the substantial investment required in product selection, packaging, warehousing, deliveries and advertising to get the customer to visit the site to buy in the first place.While internet shopping will produce changes, these will not be as immediate as some predict. As consumer patterns change, shopping online will become the norm. What many see as the technology of the future is actually very real today.Is our High Street safe? Yes – for the time being.Simon Boss is head of the retail unit and Michael Park is a property partner at Edge Ellison.

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