Even as E-Commerce Slows, Warehouses Are Getting Bigger and Smarter

The last few years have shown a boom in e-commerce and, with it, logistic warehouse construction. The 2020 pandemic lockdowns accelerated the growth of e-commerce, and sales increased by 43 percent between 2019 and 2020, according to The Annual Retail Trade Survey, a program of the US Census that produces industry-level estimates of cash flow for the retail sector in the U.S. each year. In fact, the early months of the pandemic showed a growth equivalent to 10 years in only 3 months, according to a McKinsey report. Although a “return to normalcy” has brought e-commerce back from its peak in 2020, in the third quarter of 2021, online sales have leveled off at 30 percent above pre-COVID levels. 

The early 2010s saw the rise of e-commerce: big box distribution centers and double-loaded mega warehouses were the trends. Amazon alone spent $14 billion between 2010 and 2013. Consumer purchasing increased steadily, with growth peaking in the first quarter of 2020 during the harshest period of the pandemic. Customers are purchasing more and more online, but now at a slower rate, we will probably see continued slow growth of online consumption in 2023.

The looming recession, expected to hit late 2023 and early 2024, is not cooling construction plans quite yet. Taylor Odegard, CEO of NavigatorCRE, a commercial real estate data analytics company, explains, “tenant rates are still high in demand, the U.S. industrial market is probably close to 95 percent or more occupied.” The vacancy rate, which was 5 percent in 2020,

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