Strong Demand for Logistics Space Drives Up Profits and Competition

Growing demand for logistics space (warehouses and storage units) is increasing competition in the sector and driving up rents and profits for owners, according to an article in the Wall Street Journal.

For instance, while retail, lodging and office REITS have posted moderate growth in Q3, owners of logistics space are posting much stronger results. Prologis and East Group Properties, both owners and developers of industrial property, have posted double-digit increases on expiring leases, said the article. The pressure is coming from the growth of eCommerce, especially for distribution centers and warehouses on the West Coast.

Meanwhile, Amazon is, for the first time, charging its sellers a premium for storing products in its warehouses during the months of November and December, as the eCommerce-giant deals with overflowing warehouses. For example, another  article in the Wall Street Journal explains that a seller with 500 small Easter baskets in stock, would normally pay storage fees of about $124 in November, up from $30 a month the rest of the year. In fact, Amazon has recently had to temporarily put a stop on accepting shipments from new sellers as the busy Christmas season approaches.