Driven By E-Commerce, Metro East Warehousing Thrived During Pandemic
Warehousing in the Metro East associated with e-commerce picked up steam with changing consumer habits during the coronavirus pandemic, while hospitality and tourism-related businesses are struggling to find workers ahead of a likely busy summer season.
Gateway Commerce Center, a vast collection of warehousing space in Edwardsville, initially saw a pause in activity between March and mid-April 2020 as companies with leased space evaluated how the pandemic would affect their business, said Eric Gowin, chief executive officer of Contegra Construction, which builds the warehouses at Gateway.
“What followed in the next six to eight weeks was the flipping of a switch where e-commerce ramped up even more,” he said. “In speaking with them and the boots on the ground, they’ve been in what they call ‘peak season’ ever since COVID really set in.”
“Peak season” usually describes the time around the holidays when companies working to distribute goods experience a burst of demand, Gowin said.
“You can’t drive a block in any direction out here and not see a help wanted sign at all these warehouse distribution centers,” he said.
The growth at Gateway and the surrounding park in the last year has largely come from existing tenants like Proctor & Gamble, Unilever, Dial and Amazon, Gowin said.
In 2020, companies filled an additional 1.2 million square feet of warehouse space in the Metro East submarket, the overwhelming majority in the Gateway Commerce Center area, said Dave Branding, who leads Jones Lang LaSalle’s industrial real estate brokerage practice in St. Louis.
In the entire St. Louis metro region, about 4.1 million more square feet was filled in 2020, the same pace as 2019, he said.
“Despite a two-month pause in businesses leasing industrial buildings, we saw the same amount of leasing absorption in 2020 as in 12 months in 2019,” Branding said. “The expectation during that pause in April and May was that 2020 would be a lost year.”
The growth of industrial leasing in the region likely won't wane as other parts of the economy come back, he said.
“COVID has changed consumer shopping habits,” Branding said. “We’re all ordering more products online, all of those products need to be stored, distributed or delivered from some form of industrial building.”
The only way this trend might slow down is with the rising cost of materials, Gowin said.
“Steel is one that comes to mind,” he said. “We see weekly increases of raw steel materials.”
Tourism struggles to find workers
While warehousing is a clear winner in the pandemic economy, restaurants, bars and businesses tied to tourism and leisure were badly hurt.
And now, as many of the pandemic restrictions are relaxed, these businesses are struggling to find workers, said Cory Jobe, president and CEO of the Great Rivers and Routes Tourism Bureau, which represents Madison, Macoupin, Montgomery, Jersey, Calhoun and Greene counties.
Alton Mayor David Goins has noticed how fewer workers are forcing some businesses in his community to close early or take longer with orders.
“They’re short staffed, and they’re doing the best with what they’ve got,” he said. “Hopefully it can rebound being that this time last year everything was just shut down.”
The difficulty with hiring comes at a critical time for small businesses and cities in the region, like Alton and Grafton, which rely on weekend tourists.
There’s not a single factor why people aren’t filling open hospitality jobs. In recent weeks, many Republican-led states, including Missouri, have ended increased unemployment benefits, saying the higher payments didn’t encourage people to return to the workforce.
But Jobe said workers are considering more than money.
“School is not fully back, there’s still remote learning,” he said. “There could be a single parent who can’t afford child care or day care services.”
There’s also the issue of safety amid the uncertainty of different mask rules in different parts of the St. Louis region, Jobe said. And recent guidance from the Centers for Disease Control and Prevention did more to confuse than clarify, he added.
“You don’t have to wear a mask if you’re fully vaccinated, but how do you know if an individual is fully vaccinated?” Jobe said. “There’s not a playbook for this.”
Uniformity in how businesses across the region enforce safety guidelines would help build confidence for employees and patrons, he said. Regardless, tourism is poised to make a large comeback this summer, Jobe said.
“You can make good income because we’re right here in our travel season, and the demand is high,” he said.
Follow Eric on Twitter: @EricDSchmid