Warehouse Demand Increases as Ecommerce Surges
By: Dan Smolensky, Supply Chain Solutions Group
Retailers will need an additional one billion square feet of industrial real estate by 2025 as the need for warehouse space grows along with online sales.
The coronavirus pandemic has sped up the pace of online activity with retailers now at levels they didn’t expect to reach for another two to five years. Consumers are becoming increasingly comfortable about shopping online as they avoid stores.
The search for fulfillment center space has also led to speculation that companies such as Amazon.com may look to acquire former anchor store real estate in malls with an eye towards converting them. One report explained that 13.8 million square feet of United States retail space has now been converted to 15.5 million square feet of industrial space. As for the future, the report pointed to key Midwestern markets—in Milwaukee, Cleveland, Chicago, Omaha, and Dallas/Ft. Worth—as representing one-third of national conversion projects, due, in large part, to a significant number of “dead malls.”
Regardless of where they find it, retailers are going to need a lot of space to meet demand, according to Chris Caton, head of global strategy & analytics for Prologis. He said that his company “estimates these customers require 1.2 million square feet of distribution space for each $1 billion in sales, which means e-commerce requires three times the space as traditional through-put distribution.”
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