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Will E-Commerce Increase Due to Covid-19?

admin interviewed CEO of Vision Capital to get his thoughts on what changes could be coming to the commercial real estate market. The article titles, What will Covid-19 mean for commercial real estate?, offers his insights and how he sees a growth for the demand of warehouses.

Olin expects Covid-19 to accelerate the movement away from bricks-and-mortar stores. Even businesses that were once thought of as “coveted tenants” in the retail space, such as grocery stores, will face challenges.

“Over the last six weeks, grandma has figured out that she can go online, order her groceries and have them delivered to her door,” Olin said. “Grandma now doesn’t need to get into her car and drive to the Loblaws or the Safeway, park and have all of that stress.”

As e-commerce continues to gain ground, warehouse space will become an increasingly attractive investment, Olin predicted, noting that e-retailers need more warehousing capacity than traditional retailers.

“You need three square feet of industrial space for an e-retailer compared to every one square foot you need for a store,” Olin said. “If you buy something in a store, there’s an 8% likelihood you’ll return that item to the store. If you buy something online, there’s a 30% chance you’re going to return that item to the warehouse.”

Olin said he expects higher levels of inventory to be held in warehouses going forward to mitigate future supply chain shocks. He also predicted there will be a “likelihood of some element of de-globalization” coming out of Covid-19, which would shore up manufacturing in North America and further increase the need for warehouse space.

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