Resilient Rebound: Warehouse Construction and Automation Trends Signal Recovery

Interact Analysis’ latest research reveals a rebound in warehouse construction after a slowdown in 2022 and 2023. The dip was prompted by a plateau in e-commerce growth and higher interest rates, curtailing investments in real estate. However, signs are emerging of e-commerce stabilizing and reverting to pre-pandemic growth rates. Additionally, disruptions in supply chains due to COVID-19 are prompting a move toward just-in-time supply chains, necessitating expanded storage capacities.

Forecasts indicate an imminent return to double-digit e-commerce growth rates, marking early stages of recovery. Despite an anticipated 25% drop in warehouse additions to the global building stock compared to 2022, deeper analysis by Interact Analysis challenges the perception of declining e-commerce sales. Although e-commerce’s share of total retail sales has dipped, actual sales remain robust. This suggests a continued need for fulfillment capacity, aligning with pre-pandemic demand levels.

The transition from just-in-time to just-in-case supply chains will significantly influence warehouse construction. Heightened uncertainty is leading companies to bolster inventory, driving the need for increased storage capacity. This trend is poised to fuel warehouse construction in 2024 and 2025, consequently boosting warehouse automation revenues by 2025.

Interact Analysis’ premium Warehouse Building Stock Database release offers insights into warehouse ownership, operations, and partnerships with automation vendors. Notably, Amazon leads in warehouse count, trailed by Walmart, albeit with an 80% difference in their UK, France, Germany, Italy, Canada, and US presence. Surprisingly, despite Amazon’s vast warehouse network, its per-warehouse automation investment lags significantly behind other retailers like Adidas, mainly due to its extensive footprint.

According to Rueben Scriven, Research Manager at Interact Analysis, “The surge in warehouse construction will drive a notable uptick in automation demand. Investments are anticipated to rise by late 2023 and into 2024, with automation revenues forecasted to regain double-digit growth by 2025. Specifically, we foresee heightened demand for unit storage systems, especially in the US, as a result of the shift towards just-in-case supply chains.”