Logistics and industry overtake retailers in demand for warehouses

E-commerce has heated up the warehouse market in the last two years Photo: Tiago Queiroz/Estadão

Logistics companies and industries have overtaken e-commerce merchants as the main demand for space in warehouses located on highways that function as warehouse and distribution centers for goods. The phenomenon was observed by real estate consultancy Newmark and suggests an inflection in terms of demand. That’s because the explosion of online sales over the past two years and the advancement of retailers have been the main drivers behind the growth of the warehouse real estate market.

The latest research conducted by Newmark showed that in the state of São Paulo, the largest leases whose tenants were discovered included industries and logistics companies – although retailers retained a relevant share. Leading the way was the industrial sector, which leased 110,000 m² (26% of the total discovered), while 79,000 m² (18.5%) was related to logistics, transport and delivery. E-commerce is in third place with 69 thousand m² (16%). The rest was distributed among other segments.

Braskem is among the largest renters in the third quarter

Among the largest landlords in the third quarter are Mercado Livre (53.1 thousand m² in Baruera), Braskem (45.6 thousand m² in Mauá), Coopercarga (42.6 thousand m² in Vinhed) and Correios, (28.2 thousand m² in m² in Guarulhos).

One of the explanations for this phenomenon lies in the fact that traders already have enough real estate for business and have now taken their foot off the gas. At the same time, there was a growth in demand from external companies for logistics services.

Retailers in general have made large investments in logistics space since the pandemic. However, high interest rates have dampened demand for electronics, which is still a major selling point for major Brazilian e-commerce companies like Magazine Luiz. In the case of Magalu, in mid-2021 the company announced an ambitious goal of moving from 26 distribution centers at the end of that year to 33 by 2023, from 119 to 417 cross-docking stations, among other logistics investments. All of this would bring the company to a total warehouse area of ​​2 million m² in 2023, compared to 1,180 million m² with which the company would end 2021.

In Magalu, the usage plans have changed

Magalu kept the forecast, but plans to use the space changed. In presenting the results for the second quarter of 2022, the CEO, Frederico Trajano, said that the company will start storing, sorting and shipping products from retailers in its virtual shopping center, so-called ‘fulfillment’ in market jargon. “This has no marginal cost to the company because, in addition to reducing inventory, we have more available space in virtually all distribution centers to place our sellers’ products (suppliers)“, he told the investors. That is, in order to use all the space, the company started offering a new service for the sellers of the platform.

Warehouse rental, delivery and prices

Regardless of the shift in demand mix, the warehouse market remains strong, according to Newmark. The so-called ‘net absorption’ (which measures the balance between areas leased in the period minus areas returned by tenants) was 989 thousand m2 between January and September, an increase of 74% compared to the same months in 2021. In other words, companies are looking for more space for rent. In the third quarter alone, net absorption amounted to 428,000 m², which is equivalent to 43% of the entire year.

High demand continues to motivate commercial real estate companies to launch new projects. Works in the amount of 594 thousand m² were delivered in the third quarter, accumulating a total of 1.17 million m² in the year.

The level of vacant spaces recorded a slight increase, moving from 11.6% to 12.6% of the total available areas. But nothing serious. The level remains healthy, and the increase in vacancies is only a reflection of the large volume of recently delivered work, which will soon be commercialized, according to the consultancy.

As a result of strong demand and the arrival of ‘Class A’ warehouses in valued regions, the average asking rental price in São Paulo ended at R$21.77/m²/month, up 3% on the previous quarter and up 13% compared to the same period last year.

This note has been published broadcast on October 31, 2022, at 12:03 p.m

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