The Hustle

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:

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.

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