E-commerce explosion drives warehouse construction boom in Canada

Canada is now seeing high growth , with its online shopping share doubling to at least 40 per cent, due to changes in consumer shopping behaviour during the pandemic .

Canada is on the brink of a warehouse-building boom as surging demand for online goods is expected to continue beyond the pandemic.

An additional 40 million square feet of warehouse space will be needed over the next five years after e-commerce sales grew 32% last year, according to a report from brokerage firm CBRE. That’s more than all the leasable warehouses in the country’s three largest industrial real estate markets combined, the report said, meaning there’s little choice but to build new facilities.

After lagging behind some developed countries in e-commerce, Canada is now growing the fastest as consumers doubled their share of online shopping to at least 40 per cent during the period , according to a recent report from JP Morgan.

Retailers are rushing to build logistics hubs to fulfill orders, making Canada's three largest cities, Toronto, Vancouver and Montreal, the three tightest markets for industrial space in North America, according to CBRE .

E-commerce explosion

“I never saw the logistics market like it will be in 2020 and 2021,” Paul Morassutti, vice chairman of CBRE Canada , said in a phone interview. “ Because last year not everyone was going to be an e-commerce consumer , but now everyone is. Every retailer knows they have to have digital presence to survive, so now they’re building their supply chains. ”

The surge in online shopping is a permanent "paradigm shift" that will last beyond the pandemic, according to Shopify, the Canadian e-commerce company that is Canada's largest company by market value. Meanwhile, lingering coronavirus restrictions mean office and retail properties will continue to struggle in 2021, according to the CBRE report.

In another big winner during the pandemic , Canada’s rental apartment construction industry is expected to get even hotter after attracting a record C$11 billion ($8.7 billion) in investment last year .

While vacancy rates rose across Canada last year due to the pandemic , the cost of buying a home has also soared. That, along with government plans to increase immigration, has led large institutional investors to pour money into rental buildings, betting that demand will only grow, according to CBRE.

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