- Date : 30/01/2023
- Read: 3 mins
Warehousing boom in real estate
The COVID pandemic brought about a major shift in consumer behaviour. Where many favoured the brick and mortar stores for their needs, now look for digital alternatives. This has an impetus to e-commerce, and warehouses have become in demand.
Related - Here's what real estate funds are and whether they are a good investment.
While the real estate sector previously saw investments in residential or commercial estates, a warehouse is a new addition to the portfolio. A lot of institutional investors favour investing in warehousing. What’s fuelling this investment spike? Let’s understand –
Increasing demand for warehouses
- Expanding e-commerce
A global realty firm researched and estimated that between 2022 and 2026, the e-commerce segment is expected to occupy about 98 million square feet of area and grow by 165%.
(Source: https://timesproperty.com/news/post/warehousing-next-big-thing-in-commercial-real-estate-blid2526)
With the growing e-commerce segment, more areas would be needed for logistics, so the demand for warehousing is expected to rise further.
- Higher rental income
Warehouses have the potential to deliver higher rental incomes to their owners. This attracts many investors to invest in warehouses and creates a regular income source.
- Modern designs and functionality
Modern-day Grade A warehouses are created using international standards of storage and warehousing. They have high-performance floorings, increased heights, have AI-technologies that allow quicker processing. Moreover, integrating green technology, fire safety standards, and optimal docking and parking space ensures these warehouses deliver the best experience. As such, Grade A warehouses are becoming the preferred choice of many businesses aiding their growth.
- Demand for speedier deliveries
As people shop online, there’s also an increased demand for quicker deliveries. Concepts like 10-min or 20-min deliveries, 1-day delivery, etc., are gaining traction. As such, platforms are looking for same-city warehouses even in Tier 2 and 3 cities. This demand for in-city warehousing is also causing a hike in warehouse demand.
- Demand from 3PL players
Besides e-commerce platforms, third-party logistics (3PL) players invest in independent warehouses to smoothen the supply chain process. As per research, 3PL entities are expected to have 56% more warehousing space in the coming years
As the demand among 3PL entities would grow, warehousing can become the next big wave.
The bottom line
All these factors are contributing to the growth of warehousing; it might very well become the rising star of the real estate segment. So, if you want to invest in real estate, investing in warehouses can prove to be a good choice, given their growth potential.
Related- Here are some of the top real estate stocks to pick from
The COVID pandemic brought about a major shift in consumer behaviour. Where many favoured the brick and mortar stores for their needs, now look for digital alternatives. This has an impetus to e-commerce, and warehouses have become in demand.
Related - Here's what real estate funds are and whether they are a good investment.
While the real estate sector previously saw investments in residential or commercial estates, a warehouse is a new addition to the portfolio. A lot of institutional investors favour investing in warehousing. What’s fuelling this investment spike? Let’s understand –
Increasing demand for warehouses
- Expanding e-commerce
A global realty firm researched and estimated that between 2022 and 2026, the e-commerce segment is expected to occupy about 98 million square feet of area and grow by 165%.
(Source: https://timesproperty.com/news/post/warehousing-next-big-thing-in-commercial-real-estate-blid2526)
With the growing e-commerce segment, more areas would be needed for logistics, so the demand for warehousing is expected to rise further.
- Higher rental income
Warehouses have the potential to deliver higher rental incomes to their owners. This attracts many investors to invest in warehouses and creates a regular income source.
- Modern designs and functionality
Modern-day Grade A warehouses are created using international standards of storage and warehousing. They have high-performance floorings, increased heights, have AI-technologies that allow quicker processing. Moreover, integrating green technology, fire safety standards, and optimal docking and parking space ensures these warehouses deliver the best experience. As such, Grade A warehouses are becoming the preferred choice of many businesses aiding their growth.
- Demand for speedier deliveries
As people shop online, there’s also an increased demand for quicker deliveries. Concepts like 10-min or 20-min deliveries, 1-day delivery, etc., are gaining traction. As such, platforms are looking for same-city warehouses even in Tier 2 and 3 cities. This demand for in-city warehousing is also causing a hike in warehouse demand.
- Demand from 3PL players
Besides e-commerce platforms, third-party logistics (3PL) players invest in independent warehouses to smoothen the supply chain process. As per research, 3PL entities are expected to have 56% more warehousing space in the coming years
As the demand among 3PL entities would grow, warehousing can become the next big wave.
The bottom line
All these factors are contributing to the growth of warehousing; it might very well become the rising star of the real estate segment. So, if you want to invest in real estate, investing in warehouses can prove to be a good choice, given their growth potential.
Related- Here are some of the top real estate stocks to pick from
