Warehouse Demand Surges with E-commerce Boom

The pandemic has pushed more consumers online, prompting a rush for warehouse space, from small “last mile” delivery sites near city centers to massive “big box” distribution centers.

Amazon has inked lease agreements on massive warehouses worldwide as sales have jumped. It has committed to opening 33 fulfillment centers in the US this year, from Atlanta to Arizona. Ten years ago, E-commerce accounted for 6.7% of all retail sales in the US. Furthermore, the business is unlikely to diminish as stores reopen. Consumers like the convenience of online shopping.

Until recently, the most desirable property to own was a traditional mall. However, the rise of E-commerce has shifted the demand to warehouses. In addition, dozens of shopping malls in the US are being converted into industrial sites. Rents for warehousing are expected to grow 6% per year.

Another reason for the surge in demand is that fashion retailers with a limited online presence have desperately sought space to store stock that they could not shift during the pandemic. They already have warehouses full of clothes, and then next season’s clothing comes in, and they have no place to store the newer products, thus the surge in warehouse space demand.