A significant increase in warehouse demand in the Philippines is one of the more positive outcomes of the boom of e-commerce during the pandemic. Imposed lockdowns and widespread mobility restrictions jump-started the rapid rise of online shopping across the country. The e-commerce industry’s revenue is projected to hit $5.9 million by the end of 2021, an unprecedented annual growth rate of 14.64% compared to the pre-pandemic years.
Key Drivers to the Surge in Warehouse Demand
As top retailers dominate e-commerce and fast-moving consumer goods become in demand, the Philippine real estate sector observed a surge in warehouse demand. While many Filipinos will not completely let go of their brick-and-click shopping behavior, e-commerce will still positively impact this market shift. Going online from offline will continue driving the demand for more warehouse and logistics spaces locally.
In 1Q/2021, the country logged a 9.1% occupancy rate out of the country’s 1.6 million square meter combined storage facilities. Tenanted warehouse rentals in Central Luzon are at 100%, while Metro Manila recorded 98.4% and Calabarzon at 84.2%.
Warehouses: Great Long-term Investments
Warehouses are forecasted to be the next big investment in real estate. Local and global retailers who were forced to shut down physical stores and venture onto online platforms will continue increasing storage demands for their product inventory in the new normal.
Warehouses are excellent real estate assets to meet that need. Industrial and logistics properties are built for diverse utilization with versatile features—warehouses being one of them. They are typically arranged into three primary categories: flexible space, manufacturing, and storage and distribution.
Investing in warehouses, storage, and distribution facilities is also an emerging opportunity. Another promising trend in the country is the conversion of commercial spaces into micro-warehouses or storage facilities and last mile hubs.
RELATED: PH Industrial Real Estate: What Is ‘Last Mile Delivery’?
Why is Investing in Warehouses Worth It
Warehouses are generally low-maintenance properties. Additional costs for new fittings and structural improvements are commonly shouldered by the tenant.
This real estate asset class also provides appealing investment options for new and experienced investors alike looking to diversify their portfolios. One way to invest is directly funding the construction of new, modern facilities to fill up market demands and meet different space requirements.
An alternative option for investors with financial constraints, or those inclined to invest in less risky ventures, is to acquire shares from real estate industrial trusts (REITs). REITs are presently gaining traction in local real estate investment.
Warehouses are set to propel the local property market to new heights. Industry experts cite the continuous expansion, resilience, and stability of the warehouse and logistics market even with the easing of lockdowns and the subsequent return to a new normal. With this in mind, investors are guaranteed the best cash-on-cash return.
Searching for viable warehouses for lease in Manila or other parts of the metro? KMC’s real estate experts are here to help. Connect with Mike Coronado at (+63) 917-863-9670.
Direct your general inquiries on listings by calling us at (+63) 2-8403-5519 or sending an email to [email protected].