Writer: Joey Garrand
2 min read February 2021 — An e-commerce boom has swept the nation. Pre-covid, robust e-commerce growth was already a reality. The pandemic only accelerated that trend as individuals were unable or afraid to buy their goods from physical locations. The industrial market within the Atlanta region is among those that has been benefiting significantly from this boom.
As e-commerce spiked throughout 2020, companies in Atlanta stepped up to meet demand, so much so that industrial vacancy rates in the area are pushing record lows. According to a report from JLLopens PDF file , vacancy rates dropped 77 basis points year-over-year from 4Q19 to 4Q20, and availability dropped 182 basis points over the same period. “Leasing volume exceeded pre-COVID-19 levels with 42.3 million square feet of deals signed in 2020. This surpasses 2019’s previous record by 4.2 million square feet, and as the number of deals between the two years has little variance, volume can be attributed to large-block activity,” the report added.
Although the pandemic has posed great challenges for many industries, those challenges have in part been balanced by enormous opportunities for the industrial sector and e-commerce. In fact, JLL attributes this increase in demand to increasing e-commerce and fulfillment needs. This trend is expected to continue throughout 2021. For example, in late January 2021, a city document from the city of Chamblee’s Development Department revealed that Seven Oaks Co. LLC is planning to build a 103,000-square-foot warehouse distribution center, which will be operating 24 hours a day, seven days a week.
According to reporting by the Atlanta Business Chronicle, “Amazon has begun a new 640,000-square-foot robotics fulfillment center in Gwinnett County, as well as a 1-million-square-foot Coweta County facility that will process apparel and accessories, and a 600,000-square-foot last-mile delivery station in Fairburn. The three operations will create more than 1,700 new jobs.” In total, Amazon has invested more than $3.2 billion into Georgia’s economy since 2010.
Of course, Amazon isn’t the only company in this e-commerce rush. Home Depot, for instance, is opening three new distribution centers in the Atlanta area over the next 18 months to support the growing demand for flexible delivery and pick-up options.
As shown by research from the Federal Reserve Bank of St. Louis, e-commerce retail sales as a percent of total sales jumped significantly, from 11.8% in 1Q20 to 16.1% in Q2. Although that number dropped to 14.3% for Q3, the additional demand for industrial space represents the view that this e-commerce retail sales to total sales ratio will not return to a pre-pandemic level. Also shown by Federal Reserve Economic Data, e-commerce sales rose from approximately $160 billion to $212 billion from Q1 to Q2 of 2020, while decreasing mildly to $210 billion in Q3.
Sim Doughtie, president of King Industrial Realty/CORFAC International, also sees better days ahead given recent difficulties. “In SIOR’s estimation, the Atlanta industrial market will finish the year in good fashion and 2021 should be a banner year. That’s something we could certainly use after all of the challenges we have faced in 2020.”
Georgia is said to be the logistics and transportation hub of the Southeast, making it a prime target for investments to improve distribution capabilities amid an e-commerce boom.