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The U.S. may have one other 1 billion sq. meters of space for storing by 2025 as e-commerce is booming

As online sales increase during the coronavirus pandemic, the United States will need more warehouses to store crates and process these orders.

Fortified at home and many stationary shops temporarily closed, buyers turned to their computers and smartphones to buy everything from fresh groceries to new home furnishings to toys for pets. And even after the end of the pandemic, the trend that more and more people buy online is expected to continue.

According to a new JLL report, demand for industrial real estate could reach an additional 1 billion square feet by 2025 if more people click "buy" instead of venturing into the mall.

The commercial real estate services company said that before the Covid 19 crisis, about 35% of its industrial leasing activities were related to e-commerce. But now, it was said, as early as 2020, 50% of these leasing activities were connected to online retail.

"The first quarter was our largest leasing quarter in three years," said Craig Meyer, president of JLL's Americas industry. "We are seeing more pressure on [e-commerce companies] than during the typical holiday season … to meet consumer demand."

He explained a recent situation in which a retail company applied for a lease on a 1.2 million square meter warehouse in Delaware about 30 days ago and moved in almost immediately to fulfill orders for fresh items. Part of the warehouse included a cooling component for food that must be kept refrigerated, explained Meyer.

"This is unknown," he said. "The lease was signed and they moved in in less than 30 days." According to Meyer, the contracts usually extend over a period of nine months, from the signing of a lease to moving in.

JLL predicts that the US will need another 100 million square meters of cold stores to keep up with consumer demand and sales trends.

To put into perspective how much additional storage space is needed, Prologis, a real estate investment trust that is also Amazon's largest rental company, has estimated that e-commerce companies sell 1.2 million square meters of retail space for every $ 1 billion in sales need.

EMarketer predicts that US e-commerce sales this year will account for approximately 14.5% of total retail sales, or $ 709.78 billion. By the end of 2024, this percentage will increase to 18.1% of all retail sales, with online sales exceeding $ 1 trillion for the first time, it said.

Industrial real estate is the "darling" of the commercial real estate industry today, said Meyer.

The sector certainly has better prospects than some of its competitors – including office, retail and hotel space, where vacancies are increasing and fewer new businesses are doing business.

In the retail sector in particular, closings are increasing and are well on the way to breaking a record this year. They put pressure on the landlords to find new uses for empty rooms. Rents are also under pressure as companies that want to keep their businesses open are working to renegotiate businesses in the hope of taking advantage of the market disorder. Former department store manager Jan Kniffen predicted that a third of American malls will disappear by 2021. This could also strike cities that are dependent on their shopping centers for tax reasons.

Warehouses could be a solution because supplies are more difficult to obtain.

In some cases, dead shopping centers have already been turned into extensive logistics centers. For example, in a closed Sam & # 39; s club store in Memphis, Tennessee, there is a Sam & # 39; s Club e-commerce fulfillment center.

However, there are hurdles to converting a former sales area into something else, warned Meyer.

"There are things like zoning laws that are residential areas," he said. "It will have a lot more to do with imagining these things."

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