Real estate services firm Jones Lang Lasalle projects thatdemand for industrial real estate will grow to 1 billion squarefeet within five years, because of accelerated growth in e-commercedue to the Covid-19 pandemic and the ensuing shelter-in-placepolicies.

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E-commerce sales could hit $1.5 trillion by 2025, according toJLL, which the real estate services firm said would increase demandfor warehouse fulfillment space and other industrial real estate toan additional 1 billion square feet.

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Last year consumers spent $602 billion online with US merchants,representing 16% of total e-commerce sales, according to DigitalCommerce 360's analysis of Commerce Department retail data.Combining that with new projections from the pandemic, JLLforecasted that e-commerce sales could reach as high as $1.5trillion in five years time, adding that they are expected toincrease $20% in 2020 alone.

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Before the pandemic, as much as 35% of JLL's industrial leasingcame from e-commerce, but as much as 50% of its leasing activitythis year has already come from related operations, according tothe firm.

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"Since 2011, industrial rent growth has been positive andvacancy rates have been at historic lows providing attractive,stable, long-term returns to investors," said JLL AmericasIndustrial president Craig Meyer in the report. "These solidfundamentals and the fact that e-commerce still has a long runwayfor growth makes industrial real estate the darling of thecommercial real estate industry."

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E-fulfillment operations are among the most space-intensiveusers of logistics real estate, said Chris Caton, the head ofglobal strategy and analytics for Prologis, a global owner,operator and developer of logistics real estate.

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"Prologis estimates these customers require 1.2 million squarefeet of distribution space for each $1 billion in sales, whichmeans e-commerce requires three times the space as traditionalthrough-put distribution," Caton said.

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Online grocery has been one of the fastest-growing areas ofe-commerce, according to JLL, which projected that cold storagefacilities alone will grow by as much as 100 million square feet tokeep up with demand. The pandemic has sparked a sharp increase inonline grocery shopping as many households experimented withdigital ordering for the first time, with the trend likely tocontinue post-pandemic, the firm added.

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"E-commerce has  fundamentally changed the wayconsumers buy as well as their expectations for delivery," makingit "one of the biggest game-changers to supply chain managementsince the introduction of the world wide web and the internet,"said JLL's global supply chain and logistics consulting leader RichThompson.

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Meredith Hobbs

Meredith Hobbs writes about the Atlanta legal community and the business of law. Contact her at [email protected] or 404.419.2837. On Twitter: @MeredithHobbs.