If you bought something recently, it came to you at some point by truck. More and more, the truck bypassed the store and came straight to you from a warehouse.

Over the past several years, the popularity of e-commerce has been continually growing. The spread of COVID-19 is rapidly cementing e-commerce as a permanent fixture in the lives of many. This rapid expansion will play a key role in shaping the real estate market moving forward.

E-Commerce and Retail in Early 2020

Early in 2020, it was quite clear that the popularity of e-commerce was going to impact both the retail and warehousing real estate sectors for years to come. Robust e-commerce growth and historically low unemployment rates were fueling leasing demand for warehouse space throughout the country, and spikes in rents were reflecting that.

Retail investors were still making investments, however, with emphasis on strong tenant quality. PwC reported in their 2020 forecast that targeting markets with slowing rates of e-commerce spending could be worthwhile, under the assumption that disruptions from e-commerce spikes had already run their course.

COVID-19 and the Future of E-Commerce and Retail

Since early 2020, the world has changed considerably, and these changes will reverberate through the world of commercial real estate. PwC’s April Investor Sentiment Update shares some very telling figures about the state of retail.

Our main takeaway is that about 95% of participants believe that current social distancing guidelines may be the nudge that causes a massive amount of retailers to switch to e-commerce alternatives. Naturally, there is a heightened concern regarding the uncertainty of retail, and while some stronger tenants may be able to weather the storm, the e-commerce sector is better-positioned to overcome our current period of uncertainty. While the situation isn’t ideal for anyone, investors anticipate continued leasing demand due to the need to move goods and the natural surge in e-commerce that will follow as a result.

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