E-commerce boom spurs demand for logistics, warehousing space

THE rise in e-commerce will shape the future of the real estate industry as more people shift to digital transactions, strengthening the demand for logistics space in the country.

Global real estate services firm JLL, in its second quarter report noted that the increasing demand for better quality facilities from new entrants in the market could translate to approximately 160,000 square meters per year of new demand in the next 10 years.

“This is where the next battleground is for a lot of retail activity that we are seeing now,” Janlo de los Reyes, lead of research and consultancy of JLL Philippines, said during an online briefing on Wednesday, Aug. 12.

According to his report, 91 percent of Filipino internet users searched for goods and services to buy during the quarantine period.

De los Reyes pointed out that in a post-pandemic setup, 48 percent of Filipinos plan to do more online shopping.

Because of this, logistics will play a huge role in the real estate business.

“The outlook requires that a sustained improvement in e-commerce platform take place along with the growing trade balance with other countries and favorable manufacturing sector,” he said.

“JLL believes that logistics space developers and operators should adapt with the evolving demand brought by technology innovations and thus, build modern facilities to achieve the projections,” de los Reyes added.

Existing logistics stock in the Philippines as of the first quarter of 2020 stood at 1.7 million square meters, with about 424,000 square meters of upcoming supply scheduled for completion through 2021.

Dry storage makes up two-thirds of the existing supply, while cold storage and cold and dry storage contribute 21 percent and 12 percent, respectively.

“While there is a positive demand for logistics space in the country as reflected in the uptick in transaction activity in recent years, there is an increasing demand for better quality facilities, mostly from e-commerce firms and third-party logistics requiring high-specification warehouses that utilize technology and digital tools as part of their operations,” Tom Over, JLL Philippines’ director for industrial and logistics, said.

“The logistics sector is currently seen as the evolving asset class in the Philippines, with a number of established developers looking to increase their exposure in the sector. Focus on efficiency, specification, sustainability and amenities puts the market at a turning point for growth and improvement in quality,” he added.