While most of the offices in the United States still sit empty (or at lower capacity) one of the booming areas of the commercial real estate industry centers around the increased demand for warehouse spaces. CNBC recently did a report on the booming warehouse demand across America, as e-commerce plants its foot firmly on the grasp of American shoppers.
The example from CNBC centered around ShipBob, a Chicago-based e-commerce fulfillment company. The company, like most others, are letting some of their staff work from home remotely on a permanent basis. That created about 50% of space in their offices. However, as a fulfillment company, ShipBob is still in heavy demand for warehouse space to meet its e-commerce orders. In fact, ShipBob has more than doubled its warehouse space since the start of the pandemic. ShipBob currently has 24 locations, with plans for over 30, nationally and internationally, planned over the next year.
Shipbob is just one example of a growing trend that those in the commercial real estate industry would be wise to take advantage of. Warehouse space needed to meet the shipping demands for e-commerce continues to be in demand, even as the country returns to a new normal. In the CNBC report, the journalist found that “Vacancy rates in industrial buildings are near a record low and new warehouses can’t get built quickly enough to meet the needs of clothing makers, furniture sellers and home appliance manufacturers.”
This trend has led to higher rents for warehouse spaces. During the first quarter of 2021, rent for industrial buildings rose by 7.1% over the first quarter of last year, to nearly $8.50/sq foot. CBRE reports that 100 million square feet of available rental space was taken during the first quarter of 2021. While the pandemic has sped up this trend, even prior to the pandemic, retail giants like WalMart, Best Buy and Amazon were already working on increasing warehouse space throughout the country to meet overnight and same day delivery options. Now, even grocery stores are looking for additional space to meet the demand for Instacart and other home delivery services.
In Jacksonville, demand for warehouse space is also growing. As the population grows, not only in Jacksonvillle, but in surrounding areas, a large metro like Jacksonville can become a hub, of sorts, for these retailers to hold stock items. Companies like Loctech Ergonomic are already planning on expanding distribution centers in Jacksonville. Other companies are also following suit.
While many assume that most of the need for warehouse space for e-commerce falls at the feet of Amazon, it’s clear that warehouse demand will only increase, as more traditional retail spaces build more shipping options to try to compete with the giant that Amazon has become. And that demand will continue to be felt in Jacksonville as our area continues to expand in both physical size and population growth.
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