Delivering in the Clutch

Until the COVID-19 pandemic hit the U.S. this spring, the country’s warehouse/logistics market was having a healthy multiyear run. According to Newmark Knight Frank national research, asking rents for 1Q2020 were up 4.1 percent from the year before, and vacancy was at a cyclical low of 5.4 percent. Construction was at a cyclical high – 68.2 million square feet of new space came on the market, and 322.7 million sf were under construction. And while the coronavirus has shaken every corner of the economy, some indicators show that warehouses will remain a relatively healthy market segment. An April report from Marcus & Millichap suggested that warehouses and distribution centers could weather the COVID-19 crisis “as much-needed supplies are funneled through a smaller supply chain.” But that’s not to say there won’t be challenges. One major factor contributing to the warehouse sector’s sturdy performance coming into 2020 was the continued rise of e-commerce. As consumers took more of their retail business online – and demanded speedier delivery times – companies looked for warehouse space that was closer to their customers, often closer to larger metropolitan areas. COVID-19, along with stay-at-home orders, shuttered stores, while consumer anxiety about public places put e-commerce into hyperdrive. An April report by Prologis noted that preliminary estimates suggested a 50-percent rise in e-commerce sales in March, versus the recent trend of around 15 percent. Click to read more at