E-commerce and online shopping has seen a drastic increase over the past few months due to the pandemic. In return, warehouse leasing and investment has also increased significantly. As more people choose to do their shopping online after brick and mortar stores closing, retailers have had to increase their warehouse space to keep up with demands. This is good news for the commercial real estate industry!
Increase in E-Commerce
Retailers have seen a significant shift from brick and mortar shopping to e-commerce since the pandemic. Compared to previous years, e-commerce spending has grown 93% year over year as of this May according to MasterCard and Strategic Sorcerer. More online spending means that retailers need more warehouse space to store their goods and get them shipped out in a timely manner. Some industries that have been doing especially well include bulk retail, discount retail, grocery and healthcare.
Increase in Warehouse Space Investment
Many brick and mortars have closed and inventory has been condensed to just warehouses. According to CoStar and Abby Corbett, “Activity outpaced the monthly average of the past five years by 13% last month as tenants scooped up 74 million square feet in more than 3,800 deals.” This shows that warehouse investment and leasing has risen significantly compared to previous years. Additionally, the demand for more warehouse space and inventory also means an increase in warehouse employees. Many retailers have been hiring employees at an exponential rate to keep up with demands.
Outlook
The rise in employment for this industry is expected to come in waves/seasons, mirroring consumerism. It is unclear whether this surge in consumerism is permanent, although current trends show continued growth. Luckily, many of the employers who have been hiring employees were doing so before the pandemic. So, you can only expect this trend to continue. Additionally, according to CoStar, “institutional investors such as real estate investment trusts and private-equity firms continue to be drawn to the warehouse sector’s strong performance and proven resilience in an economic downturn.” It is good news that investors are continually interested in the warehouse industry, seeing the growth it is experiencing right now.
We believe we will continue to see an increase in e-commerce and warehouse leasing/investment as time goes on. The pandemic and nearby holiday season will only accelerate these trends. While the pandemic has brought stress and uncertainty for many, this is one area that has been positive impacted. If you are interested in investing in some industrial/warehouse space yourself, contact us for more information on active listings in the area!