Worldwide demand for logistics warehousing, already at elevated levels, will continue to surge at least through 2024 as more space will be needed to support growth in multiple industries, notably e-commerce, according to a survey published Wednesday by real estate services giant JLL Inc. (NYSE: JLL)
The survey of 720 logisticians across 43 countries and territories underscores the notion that logistics warehousing growth is a global phenomenon and that demand, which in some regions like the U.S. had been expected to level off in the next year or two, may now actually accelerate.
Another key element to emerge from the survey is the broad number of industries that have an appetite for additional warehouse capacity. While demand from e-commerce will lead the way, businesses in the air and ground parcel delivery, third-party logistics, health care, and life sciences, and construction and materials industries will also be looking for more capacity, the survey found.
Approximately 74% of the respondents forecast at least 5% annual growth in warehousing demand over the next three years. About 28% of the respondents projected 20% annual growth over that span. Roughly 71% said they expect demand from e-commerce to grow significantly through 2024. Much of e-commerce is fulfilled and shipped as parcels, and the global small parcel market is expected to increase from 103 billion parcels in 2019 to between 220 billion and 262 billion parcels by 2026, according to an index published last October by technology and delivery firm Pitney Bowes Inc. (NYSE: PBI).
About 43% of the JLL survey respondents said limited availability of land was the leading impediment to growth, while 36% cited the lack of so-called speculative property, which is constructed without a custom contract already in place. New York, Toronto, Los Angeles, Milan, Hong Kong, and Tokyo are six major commerce centers reporting vacancy rates of less than 3%, a historically low level, the report said.
The respondents were a mix of company executives and outside experts, Chicago-based JLL said. The report is the first published by JLL that addresses the future of the global logistics real estate market. The survey was conducted in April.
The eight-page report was generally not region-specific. The exception was a reference to Europe being ahead of other regions in making sustainable warehousing features a priority. About 40% of European respondents said that sustainability was an important factor in occupier decision-making about a warehouse location.