21 November 2021 With more people shopping online, the demand for industrial properties in the United States could reach an additional billion square meters by 2025, according to the commercial real estate services company JLL. The boom in logistics centers comes at the same time as the traditional retail real estate sector suffers from store closures and a sharp decline in rents for this type of property. Companies are looking to negotiate new locations. According to an article published on the CNBC portal, with online sales significantly increasing during the coronavirus pandemic, the United States will need more warehouses to store the large volume of boxes and manage these orders. Isolated in their homes and with many physical stores temporarily closed, consumers are turning to e-commerce to purchase everything from fresh groceries to new home furniture and pet toys. And even after the pandemic subsides, it is hoped that the online shopping trend will continue. According to CNBC So, with more people clicking “buy” rather than venturing into malls and shopping centers, the demand for industrial properties could reach an additional billion square meters by 2025, according to a new report by the U.S. commercial real estate services company JLL. According to CNBC, JLL stated that before the Covid-19 crisis, about 35% of its industrial leasing activity was tied to e-commerce. Now, that percentage has reached nearly 50%. “The first quarter of 2020 was our largest leasing quarter in three years,” said Craig Meyer, president of JLL’s industrial division in the Americas. “We are seeing more pressure related to e-commerce companies compared to the typical vacancy to meet consumer demand.” He mentioned a recent situation where a company related to retail requested to lease a warehouse space of 1.2 million square meters in Delaware and moved almost immediately to start filling orders for new items. Part of the warehouse included a cold storage component for food that needs to be refrigerated, Meyer explained. “This is unheard of,” he said. “The contract was signed and they moved in less than 30 days.” Deals typically last nine months, from contract signing to moving in, according to Meyer. Also according to CNBC, JLL predicts that the United States will need an additional 100 million square meters of cold storage to keep up with consumer demand and sales trends. To put into perspective the amount of additional warehouse space needed, Prologis, a real estate investment company that is also Amazon’s largest landlord, estimated that e-commerce companies will need 1.2 million square meters of distribution space for every $1 billion in sales. Meanwhile, as CNBC points out, the company eMarketer predicts that U.S. e-commerce sales will account for about 14.5% of total retail sales, or $709.78 billion, just this year. By the end of 2024, that percentage will increase to 18.1% of all retail sales, with online sales surpassing $1 trillion for the first time, the document states. Industrial real estate is the “treasure” of commercial real estate today, Meyer said. This is a sector that has a better outlook compared to some of its peers, including offices, retail, and hotels, where vacancies are increasing and there is a significant drop in new business. In retail, in particular, store closures are piling up and are on track to break a record this year, pushing homeowners to find new uses for empty spaces. Rents are also under pressure as companies trying to keep their stores open are working to renegotiate agreements, hoping to leverage market turbulence to their advantage. According to CNBC, former department store executive Jan Kniffen predicted that a third of American malls will disappear by 2021. This could also be a severe blow to cities that depend on their malls for tax purposes. As reported by the CNBC article, in some cases, malls have already been converted into expanding logistics hubs. In Memphis, Tennessee, for example, a closed Sam’s Club store now houses a Sam’s Club e-commerce call center. Conclusions However, there are hurdles in taking an old commercial space and transforming it into a warehouse, for example, Meyer warned. “There are issues such as zoning laws, especially for cases in residential areas,” he said. For him, there are many aspects at play, so these are changes that require preparation and strategy. With the growth of e-commerce, the United States may need over 1 billion square meters of warehouse space by 2025. Deagor WMS per ecommerce può aiutarti!