How E-commerce is Driving the Demand for Warehouse Space

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How E-commerce is Driving the Demand for Warehouse Space

In a July 2016 report published in CoStar, Prologis, the largest developer and owner of industrial real estate in the world, noted an average increase of 17.8% in rent for warehouse space at lease expiration in the second quarter of the year. “All in all, the last six months have been the best in our company’s history,” Hamid Moghadam, Chairman and CEO of the San Francisco-based company, stated while adding, “E-commerce and supply chain reconfiguration continue as big drivers of demand for our product.” In fact, in E-Commerce and a New Demand Model for Logistics Real Estate, published by Prologis in 2014, the REIT had observed that the shift toward e-commerce worldwide was changing the way logistics industries operated, leading to increased demand for logistics real estate for distribution activities and fulfillment centers. “As e-commerce retailers seek to drive profitability, to differentiate their offerings and to improve time to market, logistics facilities are increasingly viewed as revenue drivers,” the report said.

While large enterprises like Amazon might easily be able to access warehousing space for same day fulfillment (making their Prime service such a hit), a small or medium enterprise still needs to remain competitive in the growing e-commerce space by effectively managing logistics. The good news is that there are some excellent options in Houston for warehouses with office space for rent, such as those offered by Samuel L. Bryant Investments, easing the logistics process.

The Correlation Between E-commerce and Warehousing

In May 2016, Bloomberg reported that e-commerce was leading to increased demand for prime warehousing space that was close to urban centers. In fact, the report stated that online retail accounted for 20% of the existing demand for such space. In fact, The Wall Street Journal noted that since the end of the 2007-2008 recessions in 2010, no other industrial market in the US has grown faster than warehouse market.

In fact, according to a report by CBRE Inc., rent rates for prime warehousing space in America increased 9.9% in 2015, way ahead of the global industrial rent rate increase of 2.8%. In addition, Bloomberg stated that smaller retailers aim for warehouses with office space for rent that are more centrally located, such as in Houston, TX, to be able to deliver goods much faster to clients based all across the nation. In Houston, a warehouse for lease that is of high quality can be accessed for an affordable rent amount, helping businesses maintain their profit margins, which would otherwise get eaten up by the high rent rates.

If you run an e-retail store, can you afford to miss out on the opportunity to streamline your logistics, especially given how large players are upping the stakes with services like Amazon Prime and Walmart’s Shipping Pass? To stay ahead of the competition, it is crucial that you look for affordable warehouse space in a convenient location that allows for quick shipping to even the most remote parts of the country. This is where a warehouse with office space and climate control in Houston can be of huge help.

How E-commerce is Driving the Demand for Warehouse Space
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