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Home » Report: Pandemic intensifies demand for warehousing

Report: Pandemic intensifies demand for warehousing

Logistics real estate firm tracks growing demand for warehouses and DCs as e-commerce heats up and inventories rise.

Demand for warehousing on the rise, Prologis says
August 19, 2020
Victoria Kickham
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Accelerated e-commerce adoption and higher inventory levels could generate 400 million square feet of additional demand for industrial real estate, according to a report from logistics real estate giant Prologis.

In its coronavirus report and most recent installment of its Future Flow of Goods report, Prologis analyzes the impact of the coronavirus pandemic on warehousing and distribution, as well as how the situation affects the broader global marketplace. Top on the list is growing demand for warehouses and distribution centers (DCs) as consumer buying habits shift and manufacturers and retailers adapt to changing demands.

“The key message here is that [Covid-19] is bringing change to economies and marketplaces—and it has raised the growth rate of our industry,” Chris Caton, Prologis’ head of research and analytics, said in an interview. “In the wake of the pandemic, you see a higher growth rate [because of] accelerated e-commerce, customers carrying more inventory. And that’s in an environment where vacancy rates were [already] low.”

Prologis worked with advisory firm Oxford Economics on the research. The study found that $2.2 trillion worth of goods flow through Prologis facilities worldwide today, a 69% increase compared to 2017, when the firms conducted their initial analysis. That figure represents 2.5% of gross domestic product (GDP), compared with 1.7% of GDP three years ago.

“These figures demonstrate how much industrial real estate has grown–and it will only increase as consumers change their buying habits,” Caton also said.

Caton added that Prologis is tracking growth across several demand categories of space, including remote warehouses and DCs; regional facilities (those located in mid-sized industrial cities); multi-market strategies, in which warehouses and DCs are spread out across the country; and urban, last-touch facilities, among others.

“This study shows just how critical logistics real estate is to the vitality of the global economy,” Prologis chairman and CEO Hamid R. Moghadam said in a statement announcing the study. “Every day, Prologis sees many of the goods that make modern life possible flow through our distribution centers, which in turn underscores the interconnected nature of global trade.”

For more coverage of the coronavirus crisis and how it's affecting the supply chain, check out our Covid-19 landing page. 

KEYWORDS ProLogis
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Victoria Kickham, an editor at large for Supply Chain Quarterly, started her career as a newspaper reporter in the Boston area before moving into B2B journalism. She has covered manufacturing, distribution and supply chain issues for a variety of publications in the industrial and electronics sectors, and now writes about everything from forklift batteries to omnichannel business trends for Supply Chain Quarterly's sister publication, DC Velocity.

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