Developers struggle to meet demand for e-commerce storage space

WANDER THROUGH central and east London, and you find traces of the East India Company. In its 274-year history, the rapacious colonial-era trader tore down poor houses, replacing them with sprawling depots to store tea, silk, spices and other exotic wares. Today those same sites are occupied by offices, restaurants and flats. Soon, they could once again be stacked with merchandise. A large plot near the historic East India Docks, which once processed goods from India and China, is being converted to a mix of flats and warehouse space dubbed Orchard Wharf. The pandemic e-commerce boom has fuelled demand for warehouses. In 2020 firms in Europe leased 16% more new logistics space than the year before, according to JLL, a property consultancy. In America and Asia the rise was 21% and 32%, respectively (see chart). Some firms, like supermarkets or medical-supplies makers, needed more storage to meet offline demand. But one in four new leases signed last year in Western countries was linked to online shopping, reckons JLL, up from 12% in 2019. In China it was one in three. CBRE, a real-estate firm, estimates that a 5% increase in retailersā€™ inventories in America requires up to 46m square metres of additional warehouse spaceā€”enough to cover roughly three-quarters of Manhattan. And those inventories are growing fast as…
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