Increased e-commerce activity on industrial real estate - Prologis report
As more consumers continue to opt to buy goods online, as opposed to venturing out to retail store locations and shopping malls, amid the ongoing COVID-19 pandemic, it is resulting in a subsequent impact on industrial real estate, specifically the part of the market focused on warehousing and logistics.
That was a major takeaway in a recent report published by San Francisco-based real estate investment trust company Prologis.
In the report, entitled “COVID-19 Special Report #6: Accelerated Retail Evolution Could Bolster Demand for Well-Located Logistics Space,” the report lays out multiple findings that speak to the ongoing intersection of e-commerce and logistics, against the backdrop of industrial real estate activity, including:
COVID-19 has essentially accelerated the retail evolution, as U.S. e-commerce penetration moved up to more than 25% in April, ahead of the 15% rate at the end of 2019, with the firm estimating e-commerce penetration for all of 2020, at nearly 20% compared to a pre-pandemic forecast at 16.9%;
e-commerce requires more than three times the logistics space of brick and mortar stores, which it called a “persistently high ratio” that supports the need for additional e-fulfillment space should e-commerce penetration maintain its current pace, as more people stay at home; and
retailers that have recently announced bankruptcies account for a small fraction of logistics demand, with their distribution centers located farther from population centers, among others
Prologis Vice President of Research Melinda McLaughlin said in an interview that there are a few factors as to why e-commerce requires more than three times the logistics space of brick and mortar stores.
