Investors are increasingly turning to warehouses as investments during the pandemic, The Wall Street Journal reports. The growth of e-commerce—which has only widened since the start of the COVID-19 crisis—has sparked the need for greater storage space for businesses. Warehouses have reportedly fared better than other property types during the pandemic.
Investors are making headlines for their large scale purchases: This month, real estate investment company BentallGreenOak paid $164 million for a warehouse in Franklin Township, N.J., one of the largest single-asset industrial property sales of the year. Warehouses had been growing in popularity even prior to the pandemic due to an upswing in online sales. For example, Blackstone Group Inc. last year paid $18.7 billion to buy industrial real estate space from GLP. That raised the firm’s total to 850 million square feet of warehouse space it now owns.
The COVID-19 pandemic led to a jump in online orders as people stayed at home this spring. Online retailers struggled to keep up with demand. Companies were in need of greater warehouses to store and process goods. “Without e-commerce, [the industrial sector] would be crushed,” Eric Frankel, a senior analyst at Green Street, told the Journal. Frankel does expect demand for warehouses to slow, but he expects prices to stand firm.
Source: “Warehouses Serve as Pandemic Haven for Property Investors,” The Wall Street Journal (June 16, 2020) [Log-in required.]
