Key Takeaways
- • Prologis Research estimates 300 million square feet (MSF) of logistics real estate demand generated by the shift from 15% to 21% e-commerce penetration between 2019 and 2021, representing a structural reallocation of retail infrastructure toward fulfillment networks.
- • Amazon, representing approximately 42% of U.S. online sales, absorbed nearly 200 MSF of logistics space during 2020–2021, yet occupies less than 3% of total occupied logistics real estate—indicating significant headroom for additional players and market consolidation.
- • E-commerce penetration is forecast to reach 25% of retail goods sold by 2025 in Prologis's base case, with upside scenarios driven by same-day/next-day delivery deployment, augmented reality and metaverse purchasing capabilities, and penetration of underpenetrated segments including furniture and groceries.
- • Consumer demand for accelerated delivery is reshaping logistics requirements: more than 90% of consumers expect three-day-or-less delivery, with 30% expecting same-day fulfillment, necessitating increased last-mile and distributed fulfillment infrastructure.
- • E-commerce demand is diversifying beyond Amazon across multiple retailer categories and product lines, with pandemic-driven shifts spurring new retail business formations and multi-tenant logistics occupancy patterns.
Summary
The e-commerce penetration surge that accelerated during the pandemic is creating enduring structural demand for logistics real estate, according to Prologis research released in May 2022. While online sales growth has experienced a temporary pause as consumers return to in-person experiences including dining and travel, Prologis maintains that e-commerce will exceed its pre-pandemic growth trajectory over a multi-year horizon. The firm has consistently forecasted this pattern—calling for a "surge and then a lull" as far back as 2020—and now anticipates online sales to resume growth momentum after the current consumer rebalancing phase.
Prologis Research quantifies the pandemic-era shift in concrete terms: 300 million square feet of logistics real estate demand was generated by the movement from 15% e-commerce penetration in 2019 to 21% by 2021. This represents a fundamental reallocation of retail infrastructure from traditional storefronts to fulfillment and distribution networks. Amazon, which absorbed nearly 200 MSF during this two-year window, dominates the online market with approximately 42% of U.S. e-commerce sales. However, Amazon's logistics footprint remains relatively concentrated—occupying less than 3% of total occupied logistics space despite its market dominance—suggesting substantial capacity for competing retailers and third-party logistics providers to expand their own networks.
The base case projection models e-commerce reaching 25% penetration of retail goods sold by 2025. Upside scenarios exist should companies accelerate deployment of same-day and next-day delivery capabilities, advance online sales technologies including augmented reality and metaverse purchasing, and expand into underserved categories such as furniture and groceries. Consumer expectations are already driving infrastructure requirements: more than 90% of consumers expect delivery within three days or less, with 30% anticipating same-day fulfillment. These service-level commitments necessitate expanded last-mile facilities and regionally distributed fulfillment centers rather than consolidated warehouse networks.
A critical dynamic emerging from the pandemic shift is the diversification of e-commerce demand across retailer categories and business models. Rather than concentration among mega-retailers, logistics demand is becoming distributed across multiple retail formats and newly formed digital-first businesses. This fragmentation suggests that while Amazon will remain a substantial tenant, the logistics real estate sector is experiencing a secular expansion of demand from a broader set of occupiers, reducing single-tenant concentration risk and supporting sustained utilization across the sector.
Prologis Research quantifies the pandemic-era shift in concrete terms: 300 million square feet of logistics real estate demand was generated by the movement from 15% e-commerce penetration in 2019 to 21% by 2021. This represents a fundamental reallocation of retail infrastructure from traditional storefronts to fulfillment and distribution networks. Amazon, which absorbed nearly 200 MSF during this two-year window, dominates the online market with approximately 42% of U.S. e-commerce sales. However, Amazon's logistics footprint remains relatively concentrated—occupying less than 3% of total occupied logistics space despite its market dominance—suggesting substantial capacity for competing retailers and third-party logistics providers to expand their own networks.
The base case projection models e-commerce reaching 25% penetration of retail goods sold by 2025. Upside scenarios exist should companies accelerate deployment of same-day and next-day delivery capabilities, advance online sales technologies including augmented reality and metaverse purchasing, and expand into underserved categories such as furniture and groceries. Consumer expectations are already driving infrastructure requirements: more than 90% of consumers expect delivery within three days or less, with 30% anticipating same-day fulfillment. These service-level commitments necessitate expanded last-mile facilities and regionally distributed fulfillment centers rather than consolidated warehouse networks.
A critical dynamic emerging from the pandemic shift is the diversification of e-commerce demand across retailer categories and business models. Rather than concentration among mega-retailers, logistics demand is becoming distributed across multiple retail formats and newly formed digital-first businesses. This fragmentation suggests that while Amazon will remain a substantial tenant, the logistics real estate sector is experiencing a secular expansion of demand from a broader set of occupiers, reducing single-tenant concentration risk and supporting sustained utilization across the sector.
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