If the explosive growth of e-commerce continues as expected beyond 2024, it is likely to increase demand for logistics space from 24% now to 30% by 2030, and cross-border retailers like Shein and Temu will be a significant cause.
A new analysis by Prologis of the impact of the e-commerce boom on logistics real estate found that in 2024, online retail accounted for 56% of the total goods sales growth in the U.S. That translates to 8% a year, compared to 1.8% for in-store sales.
Retailers have adjusted their real estate strategies to accommodate this trend and enhance their warehousing and distribution facilities. Occupied U.S. logistics space has increased 12%, while occupied retail space (excluding services) has diminished by 2.4%. “E-commerce still requires three times the logistics space of in-store sales in 2024,” the report noted. “This share shift alone would produce 250 to 350 million square feet of U.S. logistics space demand over the next five years.”
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The report pointed to cross-border e-commerce demand as well, especially in Asian regions. The combined revenues of Shein and Temu from online U.S. sales grew from $6 billion in 2022 to an estimated $44 billion in 2024 – more than a seven-fold increase. Both retailers have adapted their business models to include more domestic third-party sellers and grow their U.S. logistics real estate footprints to sustain this momentum.
“In 2024, Asian third-party logistics (primarily Chinese) providers accounted for nearly 20% of U.S. industrial new leasing, particularly in Southern California and the Northeast. Early data suggest this segment could comprise a similar proportion in 2025,” it commented.
One consequence of the spike in e-commerce sales is a spike in the closing of physical stores. “As inventory and operations shift to logistics facilities, trends like showrooming, smaller-format stores, and restricted in-store stock are reducing onsite availability while increasing the need for rapid replenishment and fulfillment from nearby warehouses,” Prologis noted.
Much of the recent leasing activity in major logistics hubs like Southern California, Greater New York City, and Chicago gives companies the advantages of scale and the chance to improve their upstream operations.
Demand is also a factor. More consumers now expect free returns and same-day or next-day delivery, forcing retailers to recalibrate warehouse locations and fulfillment strategies near urban centers and enable faster deliveries.
“E-commerce penetration growth translates directly into increased demand for industrial space. For every 1% increase in e-commerce share in the U.S., 50 million to 70 million square feet of industrial space are absorbed,” Prologis stated.
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