Global Retailers Are Resetting Warehouse Demand
Posted by World Trade Distribution
Filed Under: Container Freight
The warehouse industry has faced a tremendous amount of turmoil during the past; however, the demand has been surging during the past few months. Real estate activity in the industrial space, including renewals and new leases, has jumped by close to 50 percent between mid-April and mid-May when compared to the previous 30-day period. This shows that the entire industry is recovering quickly from a brutal economic shock that unfolded during the month of April.
Furthermore, the total number of transactions during the same 30-day period is up close to 3 percent when compared to 2019 even though there was a sharp decline in activity during the prior 30 days.
A Jump in Retail
The biggest reason why the demand has been increasing is that retailers and consumer goods suppliers have jumped significantly in their numbers of eCommerce orders due to many physical locations being closed. Companies are also working to secure new space for modern distribution operations, driving up the demand for warehouse space. This is particularly true in the suburbs around large population centers. Specifically, many companies are seeing a rise in demand for online grocery delivery.
A Rise in the Demand for Large Warehouses
While all warehouses have seen an increase in their demand, the biggest jump in demand has been for warehouses that are 100,000 square feet in size or larger. They even held up during the months of March and April. They have been surging since mid-May, as many retailers are looking for ways to re-evaluate their logistics networks. In 2019, there was a shift taking place, as merchants were looking for ways to move closer to their customers to cut down on delivery times. This demand has only grown during the past few months, as the demand for online orders has surged.
An Increase in Business Inventory is Coming
As many businesses are looking for ways to cope with the increased demand, one of the side effects is going to be an increase in inventory. Many businesses are looking for ways to beat the competition and this means getting products to their customers in a shorter amount of time. In order to make this happen, they are going to have to increase their inventory. This means there is going to be a greater demand for warehouse space in the future as well. It is the kind of demand that cleaned out the grocery store shelves. This is still taking place; however, in the virtual setting. This is leading to a rising demand for more warehouses.
The Demand Is Going to Grow for Large Warehouses
This is only the beginning for those who work in the warehouse industry. This demand is only going to continue to grow during the next few months. The demand for online sales is only going to go up as the rest of 2020 unfolds. This means that the demand for warehouses, in particular large warehouses, is going to follow suit.