News

E-commerce explosion to fuel warehouse building boom in Canada

E-commerce explosion to fuel warehouse building boom in Canada
Business
Forty million square feet of additional warehouse space will be needed in the next five years after e-commerce sales rose 32 per cent last year, according to a report from brokerage CBRE Ltd.

That’s more than all the leasable warehouse space in the country’s three largest industrial real estate markets combined, meaning there will be little choice but to build new facilities, according to the report.

After lagging some developed countries in embracing e-commerce, Canada is now posting some of the fastest growth as shoppers doubled the share of their online purchases to at least 40 per cent during the pandemic, according to a recent report from JP Morgan. Retailers are rushing to build logistics hubs to fulfil orders, making the country’s three largest cities, Toronto, Vancouver, and Montreal, the three tightest markets for industrial space in North America, CBRE said.

“I’ve certainly never seen anything like the logistics market in 2020 and 2021,” CBRE Canada vice-chairman Paul Morassutti said in a telephone interview. “Last year not everyone would have been an e-commerce consumer. Now everyone is. Every retailer knows they have to have a digital presence to survive, and so now they’re building out their supply chain.”

The surge in online shopping is a permanent “paradigm shift” that will last beyond the pandemic, according to Shopify Inc., the Canadian e-commerce firm that is the country’s largest company by market value. In the meantime, lingering COVID-19 restrictions mean office and retail properties will continue to face difficulties in 2021, according to the CBRE report.

Canada’s rental apartment building sector — the other big pandemic winner — is projected to get even hotter after attracting a record $11 billion in investment last year.

Although national vacancy rates rose last year due to the pandemic, the cost of buying a home also skyrocketed. That, along with government plans to boost immigration, has led big institutional investors to pour money into rental buildings in a bet that demand will only grow, according to CBRE.

“The deal flow in multi-family was really strong last year, and we expect that to continue,” Morassutti said. “The only reason it hasn’t been even higher, and this is true for industrial as well, is there’s not enough product to buy.”
Read more on Toronto Star
News Topics :
RELATED STORIES :
Business
On the third storey of Amazons towering warehouse in Brampton, Ont., 350 pound robots zip across concrete floors, picking up tall shelves of books, clothing or electronics and racing off to...
Business
The city’s location between the mountains and the Pacific Ocean have always led to elevated real estate prices but the e commerce revolution has turbocharged demand for warehouse space. Industrial rents...
Business
Office rents in Toronto and Vancouver fell in the second quarter amid an increase in vacancies and subletting as the coronavirus put the brakes on a multi year run of tightening...
Business
Office space hasn’t been this hard to find in Toronto for a long time. Thanks to a flood of new technology and e commerce tenants, commercial space has reached a premium...
Business
Demand for industrial, land and office space is expected to keep deal activity strong, even though some investors believe Canada s property market has peaked and higher interest rates have...