Wednesday, May 5, 2021

Logistics: "Amazon is fuelling North America's worst warehouse shortage....and it's right here in Canada"

There were no stories like this when we began pitching warehousing and cold storage. It may be time to exit the portfolio investments and, if your mandate says you have to have commercial exposure, consider owning the cash flow directly. Always a tricky transition though..

From Canada's Financial Post, May 5:

Finding space around Toronto has never been harder and shortage is disrupting businesses and threatening broader economy

Finding warehouse space around Toronto has never been harder, and the e-commerce fuelled shortage is disrupting businesses and threatening the broader economy.

With the pandemic driving a belated embrace of online shopping in Canada, Inc. has been gobbling up warehouses. That’s pushed the vacancy rate in the Toronto area down to just 0.5 per cent, making it the tightest market in North America, if not the world.

Logistics consultant Richard Kunst is seeing the fallout first hand, as companies try to fill orders and move merchandise. One client, a food manufacturer, has been forced to pack roughly a third of its orders in a parking lot. Others are so desperate for warehouse space Kunst has advised they ask local farmers if they can keep goods in their fields.

“It’s cheaper to go to a farmer and say, ‘tell me how much you’re going to make off a crop on a five acre lot, and I will pay you that, plus 10 per cent, in order to drop containers here,'” Kunst said.

While the warehouse shortage is most acute in Toronto, other major cities in Canada aren’t far behind, with Victoria, Vancouver and Montreal rounding out North America’s top four tightest warehouse markets, according to real estate brokerage Colliers International Group Inc.

Amazon fuelled

The single biggest driver of this squeeze has been The pandemic has seen the e-commerce giant increase its logistics footprint by nearly 12 million square feet across nine major Canadian markets since the end of 2019, according to Colliers....


See: December 13
Real Estate: "Logistics market is hot, but is a bubble forming?"
It's always nice to see a sector you've been babbling about for a couple years finally referred to as a bubble. 

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