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Dive Brief:
- The shift from brick-and-mortar to e-commerce operations is expected to intensify as a result of the coronavirus pandemic, which will likely cause greater investment in warehouse space because e-commerce requires three times the logistics space of traditional storefronts, according to a new report from Prologis.
- "Online order fulfillment requires more logistics space because 100% of inventory is stored within a warehouse (vs. store shelves), which allows for greater product variety, deeper inventory levels, space-intensive parcel shipping operations, and additional value-add activities such as processing returns," the report reads.
- Prologis' Industrial Business Indicator, a measure of net contraction in activity within warehouses, grew from 25.8 in April to 45.1 in May. The quick uptick suggests any slump in demand for warehouse space will be short-lived, the report said.