The Pandemic Revitalizes An Already Exuberant E-Commerce Industry –

The Pandemic Revitalizes An Already Exuberant E-Commerce Industry –

Pre-pandemic, industrial was operating on all cylinders. Enter the pandemic, and industrial fired up another engine,” says Jimmy Ullrich, a director at Stan Johnson Company. It’s hard to find a better way to express the industrial activity over the last year. The market for warehouse, distribution and logistics facilities was already red-hot, but the pandemic managed to turn up the heat.

Ecommerce demand has been the catalyst for increased industrial activity during the pandemic. Many people turned to online shopping and food de-livery during stay-at-home orders last year, and the activity has spilled into 2021. The Adobe Digital Economy Index estimates that Americans will spend between $850 billion and $930 billion online this year, and next year, the number will hit $1 trillion. In the first quarter alone, online spending totaled $199 billion, up 39% year-over-year, and March was the highest month on record with $78 billion in sales. “The increase in all types of e-commerce has compressed five years of anticipated supply chain evolutions into 18 tumultuous months,” CJ Follini, managing partner at Noyack Capital Partners, says.

The activity has sent the industrial real estate market into overdrive, but it has also put pressure on an already tight industrial supply. Before the pan-demic, most major industrial hubs were operating at record low vacancy rates, and now vacancy rates have compressed even further. “The rubber band snapped exponentially in response to the pandemic, creating an acceleration of cultural trends—and their impact on industrial real estate,” says Follini. “The rapid adoption of ecommerce put a massive strain on existing infrastructure almost overnight.”