Warehouses Are Where It’s At: A Boom In Industrial Buildings
The boom of e-commerce is causing a growth in industrial real estate that shows no signs of waning. The current circumstances with the COVID pandemic are also causing a surge in online shopping, which requires more warehouse distribution centers.
As brick-and-mortar stores see decreased traffic due to pandemic restrictions and fears, warehouses are busier than ever with workers hustling to get packages out to consumers. According to JLL’s Americas industrial division, the pressure on e-commerce to deliver is higher right now than it is during the holidays. Vacancy rates remain at all-time lows, rents are at record highs, and new construction continues to rapidly increase. Demand for industrial real estate could reach an additional 1 billion square feet by 2025, according to JLL.
Even before COVID, e-commerce was the primary driver for the increased demand for warehouse space. The online sales industry has been growing three times as fast as brick-and-mortar sales since 2010; and e-commerce supply chain operations require more warehouse and logistics space—typically three times more than a traditional brick-and-mortar supply chain. U.S. e-commerce sales are predicted to make up about 14.5% of total retail sales this year, whereas a third of America’s malls are predicted to “vanish” by 2021.
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