Growth in e-commerce to bring surge in demand for industrial space across Northern California
E-commerce market share continues to grow
August 17, 2020
U.S. e-commerce penetration (%)
- Early data by Bank of America and ShawSpring Research estimated that e-commerce represented 27.0 percent of retail sales seven weeks from the shelter-in-place. In a recently updated chart posted by McKinsey, e-commerce growth continues to skyrocket during the COVID-19 pandemic with e-commerce representing almost 35.0 percent of retail transactions. There has been 10 years worth of growth in three months as consumers turn to online avenues for their retail purchases.
- Retail and Food & Beverage are the dominant industries touring the market, representing almost 17.6 million square feet of active requirements. Many of these requirements have a significant e-commerce component.
- The appetite for warehouse space has been apparent from recent leasing activity among e-commerce tenants. Notable build-to-suit leases have been signed in the Central Valley and Sacramento, with additional e-commerce tenants taking existing space in both markets. Expect interest in Class A space to persist as e-commerce market share continues to grow; however, limited existing inventory for modern fulfillment needs remains tight across the market. When the economy begins to recover, expect a need for new industrial development to meet the demand.