In huge demand right now: Warehouses

The ecommerce explosion is making logistics real estate a hot commodity… but there’s a lack of supply.


May 4, 2021

Amazon’s newest distribution center? (Ezra Shaw / Getty Images)

The pandemic turbocharged sales for ecommerce companies.

That’s the 1st-order effect.

So — like the high-minded business publication we are — we have to ask: “What are the 2nd-order effects?”

To facilitate all of these juicy onlines sales…

… warehouse space is being snapped up at a blistering pace. According to The Economist, leases for new logistic spaces are up big in Europe (+16% YoY), America (+21%), and Asia (+32%).

Ecomm players of all types — from supermarkets to medical suppliers to D2C shopping — are getting in on the action.

Interestingly, online retail requires 3x the space of brick and mortar, because shoppers expect more options.

This is leading to a 3rd-order effect

The value of warehouses is booming, with logistics making up 20% of real estate investments in 2020 (vs. 10% in 2015).

The boom is running into a land supply problem, per The Economist:

  • Industrial land has been turned into residential land in major cities
  • Restrictive zoning laws prevent the conversion of large existing lots like shopping malls
  • The public is averse to large warehouses, which are perceived as noisy and dirty

To cope, companies are getting creative: Amazon is turning golf courses in America into distribution centers and an empty car lot in the UK into a delivery hub.

We think it’s safe to call that one a 4th-order effect.

Join 1.5m+ professionals getting The Hustle daily news brief

Business and tech news in 5 minutes or less

100% free, no ads or spam, unsubscribe anytime

Psst

How'd Bezos build a billion dollar empire?

In 1994, Jeff Bezos discovered a shocking stat: Internet usage grew 2,300% per year.

Data shows where markets are headed.

And that’s why we built Trends — to show you up-and-coming market opportunities about to explode. Interested?

Join us, it's free.

Look, you came to this site because you saw something cool. But here’s the deal. This site is actually a daily email that covers the important news in business, tech, and culture.

So, if you like what you’re reading, give the email a try.

If you don’t like it, unsubscribe any time. Privacy policy.