Your Internet Shopping Sprees Are Driving an Astonishing Building Boom

         

Online shopping might feel just a short step removed from a Star Trek replicator — click a button and the thing you want (eventually) appears. But this virtualization of consumer commerce is, of course, an illusion: Everything you might order takes up physical space somewhere in the world, and stores need to find somewhere to put that stuff until you click.

Just how much space will they need as e-commerce demand surges in the coming years? A lot.

Retailers online and offline will need a combined 25 million square meters in additional space over the next five years to store and handle the stuff they sell, according to a report from real estate research firm Jones Lang LaSalle. That’s nearly 6,200 acres, or more than seven Central Parks. And that’s just in Europe.

The demand for space is being driven by the demand for stuff. In the U.K., online shopping already accounts for 12 percent of all shopping, according to the report. (The rate in the U.S. is about half that.) Germany and France aren’t far behind, though the report predicts the greatest growth will occur in central, eastern and southern Europe, where e-commerce currently makes up a smaller chunk of the retail economy.

In practice, retailers will have to build the many different kinds of structures they’ll need to literally deliver the goods, whether to their own stores or to your door. In particular, the report sees a growing demand for “mega e-fulfilment centres” in the style of the million-square-foot warehouses that anchor Amazon’s operations.

But such huge facilities aren’t just needed to serve purely online shopping.

Big retail chains have long ceased to operate as brick-and-mortar–only businesses. According to the report, many such chains have relied on the traditional distribution networks that serve their stores to do double-duty as the physical backend of their online storefronts. But filling online orders is a very different process from moving cases of merchandise from warehouse to store. As e-commerce demand rises, the big chains will need dedicated e-commerce facilities to keep up.

To accommodate the rising push for same-day delivery, the report says some retailers will likely start building more smaller warehouses closer to cities and stock them with a more limited inventory of commonly ordered goods.

More e-commerce also means more shipping, which will require more places for parcel carriers to handle packages, from their own giant distribution centers to local depots for loading neighborhood delivery trucks. An increase in online orders also means more remote returns. If you can’t take your bad purchase back to a store, you have to have somewhere to send it.

Aside from the need for the e-commerce variation on traditional logistics facilities, the rise of so-called “omnichannel” retail — industry jargon for the blurring of offline and online shopping — will lead to the spread of a new kind of retail infrastructure. In Europe especially, “click and collect” has become a common way to fill online orders. Instead of having your order shipped to your home or office, you have the package sent somewhere else convenient for picking up. Often that place is a brick-and-mortar store — Walmart offers this in the U.S. with its delivery lockers—a cross between a P.O. box and an ATM typically housed in convenience stores, shopping malls and other easily accessible public places.

As e-commerce warehouses proliferate, the report says they’ll increasingly be “manned” by robots that can more efficiently navigate these intricate mazes of consumer goods. I’ve been told in the past that the adoption of warehouse automation has advanced especially quickly in Europe, where a dearth of available land for sprawling warehouses has necessitated innovative designs better traveled by ‘bots. But however automated e-commerce becomes, more stuff will always require more space. At least until real replicators finally arrive.