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April 26, 2021 - Blog Article
Massive Warehousing Boom In Both Canada and the US


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Although the commercial real estate market has suffered some losses since the onset of the coronavirus pandemic, some sectors have proven to be quite resilient, attracting investors and generating profits despite the economic difficulties. 

Both Canada and the US are currently seeing a massive boom in the industrial building sector, with the demand for warehousing solutions far outweighing the supply. This demand is attracting international investors and bringing in many lucrative opportunities in the process. 

E-Commerce to Rise Steadily By 2025 

The main reason behind the warehouse boom is the massive shift to e-commerce. As stores and retailers had to grow beyond their brick-and-mortar locations to generate profit during COVID-19 lockdown restrictions, they turned to the digital environment. 

Meanwhile consumers flooded to ecommerce sites to stock up on everything from toilet paper and cleaning supplies to weighted blankets and comfortable clothing. As such, the increase in demand eventually led to an increase in e-commerce sales. Retailers matched that demand by creating a stronger online presence to attract customers and ensure sales. 

The rise in e-commerce naturally led to a rise in the need for warhousing space to store products until they are sent to customers. Locating convenient warehousing solutions allowed for easy pick-ups and deliveries across Canada and the US. 

This is why e-commerce sales volume is expected to rise to over $92 billion by 2025 for Canada when it is currently at $58.8 billion Canadian dollars. The demand for warehousing is set to keep increasing over the coming years. 

The Warehouse Boom in Canada 

In 2020, in the midst of the pandemic, domestic and foreign investors started pouring billions into the Canadian industrial sector. Even with such massive investments and an unprecedented rise in interest, there is still a severe lack of warehousing solutions.

At least another 40 million square feet of warehouse space is needed to keep up with the demand – much more than what is currently available in Toronto, Vancouver, and Montreal combined. 

As the e-commerce volume rises, so will the demand for warehousing, bringing in great news for the Canadian CRE investors looking to turn a profit. 

The U.S. Follows Suit 

The situation in the neighbouring US is very much the same. Since the industrial sector is currently more appealing and brings better potential ROI than hospitality or office sectors, investors are rushing to it. 

With e-commerce giants like Amazon looking to expand their industrial square footage significantly, and smaller players getting into the game, investors are set to make a quick and significant profit with minimal risks. 

At the moment, some of the biggest foreign investors in the US real estate market includes Canada, South Korea, Germany, and Singapore. 

Summary 

Both Canadian and US Industrial CRE is experiencing an industrial boom primarily thanks to the greater need for convenient warehousing solutions. Over the coming years, the industrial sector is expected to keep attracting interest from businesses and investors, helping both parties come out of the pandemic largely unscathed.