Warehouse Demand Sees Huge Spike

Despite the fact that vaccination rates in the U.S. are nearly at 70% and many people feel comfortable returning to normal life, the demand for e-commerce, which soared during the COVID-19 pandemic, remains high.

The commercial real estate industry, specifically warehouse and storage, is reaping the rewards of those demands. Warehouse demand is up 22% in 2021, according to the 9th annual U.S. Industrial Demand Study.

The study found that logistics and parcel delivery represents close to 20% of all demand, the top category. This includes companies like UPS and FedEx. The second highest demand comes from e-commerce, representing companies like Amazon and Overstock. The third highest demand comes from traditional retailers, like Target and Lowe’s, who are also showing a need for e-commerce storage space. Food and beverage along with construction, machinery and materials rounds out the top five. With new housing in demand as well, the demand for construction, machinery and materials companies saw a huge gain, growing close to 15 million square feet. Overall, these five categories represent more than 54% of all tenant requirements in the country.

E-commerce saw a huge spike in 2021 with the COVID-19 pandemic, new entrants into the field jumped 21%. The report estimates that 2021 will have more than half of all e-commerce demand in urban areas. However, the demand for warehouse space is driving up rents for these spaces. The report found that rents are up close to 10% in the first five months of 2021.

Ultimately, the report predicts the demand for industrial spaces will continue to grow as the country rebounds from the pandemic and adapts to a new “normal.”