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COVID-19 pandemic causes surge in demand for warehouse space

By Mike Wheatley | April 20, 2020

Demand for warehouse space is surging during the COVID-19 pandemic, as retailers are seeing an increasing need for more storage after having been forced to close their stores.

The increased demand for storage space is believed to be a direct result of consumers changing buying habits. And while some see the change as only being temporary, others are re-evaluating the way they manage their bloated supply chains, the Wall Street Journal reported.

The pandemic has led to many consumers stockpiling essential items such as canned foods, cleaning supplies and toilet paper, while even apparel stores like DST apparel shops are reporting massive spikes in online orders as their physical stores are unable to open.

That of course translates to a greater need for warehouse space and has led to some companies ramping up more “safety stock” and re-thinking their old “lean-inventory” strategies, the Journal reported.

“There’s this move away from just-in-time [inventory], so the tenants are getting fatter,” Kevin McGowan, president of McGowan Corporate Real Estate Advisors, which specializes in industrial real estate, told the Journal.

Commercial real estate industry experts say the growing demand for warehouse space will probably continue even when the pandemic ends, as companies adopt new distribution strategies.

“Demand could be particularly strong for temperature-controlled warehouse space to store food if consumers keep ordering groceries online, a market that has been booming as more people stay at home under social-distancing guidelines and have food delivered,” the Journal reported.

Experts also say online shopping habits may remain, even after consumers are allowed outside again. WalMart Inc. last month reported $900 million in online grocery sales, up almost 100% from the same period one year ago.

Mike Wheatley is the senior editor at Realty Biz News. Got a real estate related news article you wish to share, contact Mike at [email protected].
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