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E-commerce is piping hot

Demand for U.S. warehouse space is rebounding as upheaval from the coronavirus pandemic pushes businesses to retool their supply chains. Industrial real-estate activity, such as lease renewals and new leases, jumped 43% from April 15 to May 14 from the previous 30-day period, according to CBRE. 

  • Demand for E-commerce increases: The push for more storage space comes as retailers are re-evaluating their logistics networks in the wake of the upheaval during coronavirus-driven shutdowns. Merchants were already moving goods closer to customers, and the pandemic is accelerating those shifts. Some retailers relied heavily on stores to fulfill online orders during the pandemic, while others are looking to build “dark store” fulfillment centers in urban areas and shift away from larger facilities in more remote locations, the Wall Street Journal reported.
  • Increase in short-term leases: Many retailers are laden with unsold inventory from the closures. A pickup in short-term deals could reflect excess inventory overall or increases in demand for certain types of products, such as food or medical supplies. Prologis’ Chris Caton told WSJ: “Short-term leasing under 12 months, was very active for us in March and April.”
  • By the numbers: Total transactions for the year are 2.8% higher than at this time in 2019 even though activity fell 29% between March 15 and April 14 as lockdowns aimed at halting the spread of the coronavirus extended across the U.S. [WSJ]

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