Canada Sees Warehouse Space Shortage

Brahm Buck

Share Tweet Share Share Share Email A warehouse space shortage fueled by the rise in eCommerce is disrupting the economy in Toronto, Canada’s largest city, and threatening to eat up all of the available storage space in the country, Bloomberg reported Wednesday (May […]

A warehouse space shortage fueled by the rise in eCommerce is disrupting the economy in Toronto, Canada’s largest city, and threatening to eat up all of the available storage space in the country, Bloomberg reported Wednesday (May 5)

As the pandemic drives a surge in online shopping in Canada, “Amazon.com Inc. has been gobbling up warehouses,” the news outlet reported. The vacancy rate for warehouse space in the Toronto area has shrunk to just 0.5 percent, “making it the tightest market in North America, if not the world.”

Logistics consultant Richard Kunst told Bloomberg he has clients so short on warehouse space they’re packing orders in parking lots. He’s advised others to talk to farmers about renting their fields.

“It’s cheaper to go to a farmer and say, ‘tell me how much you’re going to make off a crop on a five acre lot, and I will pay you that, plus 10%, in order to drop containers here,’” Kunst said.

And it’s not just Toronto. The shortage may be at its worst in that city, but three of Canada’s other major cities — Victoria, Montreal and Vancouver — are right behind it. This is almost entirely due to Amazon, which has added 12 million square feet to its logistics footprint in Canada over the past two years, including 25 percent of available space in Toronto last year.

With the supply of new warehouse pace falling behind the increasing demand, brokerage CBRE predicts Canada could run out of warehouse space by the end of the year, per the news outlet.

That’s an issue already facing businesses in the U.S. As PYMNTS reported last year, research by the real estate consultancy JLL found that America will need 1 billion square feet of new warehouse space by 2025 due to rapid eCommerce growth.

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