Strong Demand for Warehouses as Retailers Cope with Covid-19

One of the most obvious real estate impacts of COVID-19 has been the heavy hit retail property has been taking. Retail owners were already being described as facing an apocalypse thanks to eCommerce and that was before the new coronavirus swept across the country and began punishing even retailers who were relatively eCommerce-immune.

Losers and winners

The challenge facing retail real estate is matched by the opportunity now present in the industrial property business. Again, this is an acceleration of existing trends. It doesn’t matter whether a retailer sells out of a brick and mortar storefront or via an online shop, the products need to come from somewhere, meaning demand for logistical properties goes up in either case. The comparative growth of eCommerce and omnichannel retailers means particular growth amongst urban last-mile logistics properties, as we discussed in a recent report.

How long will it last?

Against the backdrop of COVID-19, the need for warehouses is only growing thanks to a trend toward inventory growth as retailers try to insulate themselves from consumer hoarding behavior. But what will happen if the nationwide shutdown lasts for many more months? Demand could eventually ebb as weaker retailers fizzle out and their stronger competitors consolidate logistical operations.

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