Canada facing warehouse boom as e-commerce grows

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

Forty million square feet of additional warehouse space will be needed in the next five years after e-commerce sales rose 32 per cent last year, according to a report from brokerage CBRE Ltd.

That’s more than all the leasable warehouse space in the country’s three largest industrial real estate markets combined, meaning there will be little choice but to build new facilities, according to the report.

After lagging some developed countries in embracing e-commerce, Canada is now posting some of the fastest growth as shoppers doubled the share of their online purchases to at least 40 per cent during the pandemic, according to a recent report from JP Morgan. Retailers are rushing to build logistics hubs to fulfil orders, making the country’s three largest cities, Toronto, Vancouver and Montreal, the three tightest markets for industrial space in North America, CBRE said.

“I’ve certainly never seen anything like the logistics market in 2020 and 2021,” CBRE Canada vice-chair Paul Morassutti said in a telephone interview.

The surge in online shopping is a permanent “paradigm shift” that will last beyond the pandemic, according to Shopify Inc. In the meantime, lingering COVID-19 restrictions mean office and retail properties will continue to face difficulties in 2021, according to the report.