Demand for e-commerce fulfilment space soars in US

CBRE report highlights the need to add over 300 million square feet of space before 2025 just to keep pace with demand

According to real estate group, CBRE Group Inc., the United States will need to add 330 million sq. ft of warehouse space dedicated to online fulfilment by 2025 to keep pace with further growth in e-commerce sales.

CBRE expects online sales to account for 26% of all retail sales by 2025. Globally, an increase of 1.5 billion sq. ft will be needed to keep up with online growth.

Construction costs have increased by 25% since December 2020 while rental rates from 1 Jan to 31 May 2021 increased by 9.7% compared to the same period in 2021.  Industrial rents are being pushed up by companies’ desire to be nearer to population centres.

Taking rents (the initial base rent agreed on by a landlord and a tenant) are rising faster than asking rents, up by 9.7% in the first five months of 2021. Industrial asking rents rose by 7.1%.

Competition is particularly high for logistics space near ports and cities and for big-box warehouses used in large online fulfilment operations as companies seek to deliver goods quicker and to increase inventory to protect against supply chain disruption.  Taking rents for bulk warehouse space of 500,000 or more square feet increased 13.2% from the same period in 2020.

Available industrial land for new warehouses close to urban centres has declined in the last ten years. According to a report from logistics real estate owner and manager, Prologis, this factor is adding to pressure on warehouse supply, especially for larger buildings with higher ceilings and the necessary parking to accommodate e-commerce fulfilment.

comments powered by Disqus