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In Focus: How 3-D Printing Will Impact the Supply Chain and Commercial Real Estate

As 3-D printing makes on-demand manufacturing feasible, it will affect the supply chain, causing producers to locate closer to their major markets.

Directory 2016
The invention of 3-D printing is arguably one of the most disruptive recent technological advancements, although its potential is far from fully realized. Much of the focus now is on how the technology can be applied to different industries, from medicine to food to auto parts; but the implications go even further — to the supply chain and, by extension, commercial real estate development.

The E-Commerce Effect
To understand how changes to the supply chain impact commercial real estate, consider e-commerce. Amazon is experimenting with same-day delivery in select cities, which is part of a broader strategy to shorten the time it takes to deliver goods to customers and compete head-to-head with brick-and-mortar retailers. As a result, the company’s distribution centers are being located closer to major population centers.

3-D printing represents the ultimate supply chain disruption because it makes on-demand manufacturing feasible, which will change where, not just how, things are made. This move toward faster delivery also makes proximity to Memphis or Louisville — major distribution centers for FedEx and UPS, respectively — a priority for online retailers. Moreover, about 70 percent of the U.S. population lives east of the Mississippi River, so there is a general shift under way toward the East Coast as well. Industrial development is already reflecting these changes, and 3-D printing will likely only accelerate them.

The Rise of On-Demand Manufacturing
3-D printing represents the ultimate supply chain disruption because it makes on-demand manufacturing feasible, which will change where, not just how, things are made. As companies perfect 3-D printing and fully embrace it, the impact on commercial real estate could be substantial. Take a Lowe’s Home Improvement store, for example, which could print certain products on-demand — such as pipes or hinges — based on an individual customer’s order. The need for massive inventory and the square footage to house it could diminish.

Even if products aren’t printed on site, on-demand manufacturing via 3-D printing will cause more producers to locate close to major markets. By substantially reducing the cost and scale needed to make a wide range of items, 3-D printing will enable manufacturers to re-shore facilities and deliver products more quickly. When an item is made-to-order, it needs to get to the customer quickly or business will be lost to stores with inventory.

CRE Will Reflect the Supply Chain’s Evolution
There’s little doubt that industrial development will change as 3-D printing becomes commonplace. Manufacturing — and the infrastructure to support it — will move closer to population centers as companies compete based on how quickly and inexpensively they can deliver products to customers. The East Coast, in particular, stands to gain from this change, but large retailers will have to adapt as product inventory becomes a liability. Will traditional retailers find new uses for their shelf space or, ultimately, reduce their square footage? The jury is still out.

3-D printing is in its infancy and predicting the winners and losers may be premature. One thing seems certain, however: The technology is revolutionary and commercial real estate will not be immune to the supply chain shake-up if — or when — 3-D printing is fully embraced.
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