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eCom Growth Brings Warehouse Scarcity

Warehouse and industrial space is a hot commodity in real estate right now. And the demand for warehouse property is steadily climbing due to the eCommerce boom. People are turning to eCom to buy games, apparel, and even necessities. When you buy a T-Shirt from that Instagram account you follow, you probably don’t stop and think about where the product is made or warehoused. You just want your IG shirt.

Most online shoppers may not consider that their purchases require warehousing, but the reality is eCommerce actually requires more warehousing space than in-person shopping. Kinda mind blowing, right? All of this leads to an absolutely booming demand for warehousing space right now.

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What’s All This Mean for the Real Estate Market?

Glad you asked--the increasingly high demand for warehouse property is leading to some record highs and lows, as well as some new and unique investment opportunities for companies. Warehouse vacancy is at an all-time low in the U.S., while the cost to rent a warehouse is skyrocketing. Many companies that rent warehouse space are now moving towards ownership as they see their rent rates consistently going up with no end in sight. On the other end of the spectrum, larger companies that already own multiple warehouses are terminating leases they do hold to grow their ownership portfolio.

Warehousing Scarcity Projected to Persist

This trend in demand for warehouses and industrial property for eCommerce fulfillment is likely to be the new norm for a while. Right now, the U.S. contains 14 billion square feet of industrial property and that number is growing--as is consumer spending in eCommerce. Despite the outlook of the eCom sector and the correlated need for warehousing, investors anticipate a price drop in commercial spaces due to tenants going out of business and terminating leases as a result of the pandemic.

The International Council of Shopping Centers estimates that eCom is projected to account for 32% of all retail sales by 2030. The chart below (courtesy of the US Dept. of Commerce Census Bureau News) shows what the trajectory of eCommerce sales in the US really looks like:

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It naturally follows that warehouse space will become more and more scarce if eCom retail sales continue the trajectory they’re on. Another takeaway from this chart is that the current eCommerce boom isn’t attributable to the global pandemic necessarily--eCom sales were already on this path.

kk What’s Next?

eCommerce companies are going to need more warehouse/industrial space, period. As are logistics organizations and ancillary eCommerce companies. The increasing demand for more and larger warehouses, coupled with the increasing reliance on eCommerce, is going to put a major premium on warehousing spaces in the future.

If you want to learn more about what ShipDaddy can do for you, request a quote here.

Oh, and subscribe below to stay up to date on the latest in eCom!

eCommerce Growth Leads to Massive Warehouse Demand

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eCom Growth Brings Warehouse Scarcity

‍What’s All This Mean for the Real Estate Market?

Warehousing Scarcity Projected to Persist

kk What’s Next?

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What’s All This Mean for the Real Estate Market?