How to Invest in Warehousing
As a result of the COVID-19 pandemic, warehouse demand has skyrocketed, which means businesses now require more warehousing. Here are some pointers for investing in warehouses.
Warehouses are in high demand. They were already high prior to the COVID-19 outbreak, but demand skyrocketed when stores were temporarily closed due to the pandemic and people began shopping from home.
The trend toward e-commerce has since become stronger. Even after stores reopened, SMEs realized they needed to offer online shopping, or their customers will move on. In turn, this has increased the demand for warehousing and everything connected to e-commerce and national and international trade, such as shipping, digital cargo transactions, risk management, services for clearing and forwarding, car exporting, and more.
Long story short: companies need more warehousing.
Local Differences
According to real estate firm CBRE, for every $1 billion in e-commerce sales, 1.25 million square feet of additional warehouse space is required.
That said, from an investor's point of view, not every warehouse investment will always be profitable. As always in real estate, there are big local differences.
For example, e-commerce growth in Canada is currently more significant than all the available leasable space in Canada's three largest industrial markets combined. Consequently, with vacancy rates for existing warehouses at historic lows, businesses may soon be unable to find places to store their inventory.
That sounds like a good investment opportunity, but investors still need to look at the individual assets to assess whether or not the investment case makes sense.
Three Ways to Invest
There are three ways to invest in warehousing. First is direct warehouse investments, meaning buying properties directly and renting them out to different businesses. The second method involves flipping existing retail spaces into warehouse facilities and then selling or renting them out. And last but certainly not least, investing in warehousing facilities through a real estate investment fund, or a real estate investment trust (REIT), is another good option.
For most investors, the third way will likely be the best, as investing with smaller sums is possible. REITs are highly liquid, and funds offer broader diversification than investing in one single asset.
Work with Export Portal
At Export Portal, we understand how difficult penetrating new markets can be. That’s why we have collaborated with different experts to keep you informed and updated. Check out our site today and learn more about how we can help you expand your online export business.
Comments 0