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Amazon is surely the biggest e-commerce company in the world but with competition heating up, e-commerce firms of all sizes are fighting to find industrial real estate inventory for themselves. This surge is due to the COVID-19 pandemic which led to a boom in online shopping.
In Q2 of 2021, the proportion of Prologis’s lease signings from e-commerce companies increased by 5% as compared to Q1. This is to allow companies to have higher inventory levels to keep up with the rise in retail sales after the pandemic. Low inventory levels can cause missed sales and a loss in revenue.
As usual, the demand from e-commerce companies for real estate is higher at port-proximate areas and where the population density is high. According to Gene Reilly, Chief Investment Officer of Prologis, Southern California and New Jersey are areas seeing peak demand. Apart from location, other firms’ focus is to shorten delivery times.
“There is a lot of focus on shortening those delivery times. But more mid-size organizations might be in an adjacent location or in a regional location to still build out the basic infrastructure for executing online,” explained Chris Caton, Prologis’ managing director.