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April 5, 2017

With e-commerce fulfillment being one of the strongest dynamics driving industrial real estate demand, the resulting need for warehouse labor has also increased dramatically. This, combined with a decreasing unemployment rate, has forced up labor costs and caused seasonal shortages for many operations around the country.

From 2010 to 2014, e-commerce was the third most active industrial sector, accounting for 16.1 percent of all “big-box” transactions nationally, just behind traditional retail and consumer non-durables (both with 16.7 percent). However, over the last two years, not only has e-commerce become the most active sector (22.5 percent), but the gap among the top three has widened.

Initially, the bulk of this e-commerce activity took place in major MSAs like Central Pennsylvania, Dallas-Fort Worth and the Inland Empire. While these larger markets remain active today, there is a growing shift to secondary Midwestern markets. MSAs like Indianapolis, Columbus, Concinnati and St. Louis have all seen a spoke in e-commerce deals over the past 24 months. Indianapolis, in particular, has seen the e-commerce sector account for 61.2 percent of “big-box” activity duirng this time frame.

Despite significant automation, the e-commerce industry’s effect on demand for labor has been magnified by its heavy employee counts and severe seasonal spokes as compared to non-fulfillment-driven operations. As a result, e-commerce-focused leasing can drive local demand for labor at a rate two or three times that of traditional warehousing operations.

Download the full JLL Industrial Impact paper

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Iggy Armenia

Senior Research Analyst, JLL Industrial

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