According to a study provided by commercial real estate firm CBRE Ltd, a near-record 26.1 million square feet (2.4 million square meters) of logistics real estate is under development, with much of it already leased. And, with existing warehouse vacancy rates at historic lows, it may soon be practically difficult for firms to find storage space.
“A large amount of industrial space is required merely to keep up with the shift in consumer behavior toward e-commerce,” says one expert. “By the end of the year, we won’t have enough room for anyone to come in.”
According to JPMorgan Chase & Co. experts, Canada trailed behind other industrialized countries in e-commerce adoption before to the pandemic, but online sales have expanded faster than in other Western countries in recent years. According to the bank, the percentage of buyers who made at least 40% of their transactions online had more than quadrupled by April 2020 compared to the rate before the epidemic.
With the country currently dealing with a fresh round of COVID-19 cases and regulations, the conditions that have made e-commerce such a big part of Canadians’ lives appear to be sticking around for a while.
Businesses have been snapping up industrial real estate at an unprecedented rate as a result of the trend. According to the CBRE research, almost 10.4 million square feet of warehouse space was leased throughout Canada in the first three months of this year. The major cities in North America, Toronto, Vancouver, and Montreal, have the lowest vacancy rates in the world.
According to Hanna, landlords may have to consider transforming retail and office buildings that were mainly underused during the epidemic into logistics centers since new construction is coming up too slowly to fill the void in those locations.
According to statistics from data source Altus Group, Amazon Canada Fulfillment Services spent $40 million (US$32 million) last month to acquire 40 acres (16 hectares) in the Toronto suburb of Pickering that had previously been home to a local flea market.
“Industrial tenants and developers are having to be inventive to free up some space,” according to the article. “This is a very lean year, making it difficult for tenants.”