If there's one sector of the real estate market it pays to invest in these days, it's industrial REITs (real estate investments trusts). The demand for warehouse space has exploded in the wake of the coronavirus pandemic as consumers have shifted to online shopping.
Amazon (NASDAQ: AMZN) has been doing its part to acquire more warehousing space to keep up with a boom in online orders. But it's not only focusing on distribution centers that get goods out to consumers, it's also investing in warehousing space that could be instrumental in the wake of natural disasters.
A new disaster-relief hub
Hurricanes and other natural disasters have the potential to cause millions, if not billions, of dollars in damage and upend the lives of those in their path. In light of this, Amazon is opening a new warehouse facility near Atlanta that will serve as a dedicated space for emergency-relief supplies.
Amazon chose that specific location because it's 310 miles from the Gulf Coast, 734 miles from the Bahamas, and within 1,535 miles of Puerto Rico and other Caribbean islands. These are the areas that tend to be the most hard hit during hurricane season.
Amazon's new emergency-supply hub will stock more than 500,000 donated items in 10,000 cubic feet of fulfillment center space. The facility will house enough supplies to fill an Amazon Air 767 cargo plane and immediately provide relief when a natural disaster strikes across the aforementioned regions.
Often, it can take days to get emergency supplies out to areas that are hit by hurricanes, so the purpose of setting up this new facility is to help shorten that timeline -- and provide relief for storm victims more quickly. To stock its new facility, Amazon analyzed data from four years of disaster support. Some of the supplies its new disaster-relief hub will feature include tents, water filters, tarps, medical equipment, kitchen supplies, and clothing.
Amazon also intends to partner with different organizations to distribute disaster-relief supplies as needed. Those include the American Red Cross, International Medical Corps, and World Central Kitchen.
A booming sector
Consumer shopping patterns aren't the only thing driving an uptick in warehouse space demand. Unfortunately, the increasing presence of stronger, more destructive storms has also contributed to that need.
Since 1975, there's been a notable increase in the proportion of Category 4 and 5 hurricanes, and as global warming continues to rear its ugly head, those numbers are apt to get worse. And while that's clearly a bad thing, it does make industrial REITs an even more viable investment -- not just in the near term but in the long run.
Meanwhile, Amazon's latest initiative could be vital in providing aid the next time a natural disaster strikes. Though the online retail giant has long been criticized for destroying mom-and- pop businesses and subjecting warehouse workers to unsafe conditions, it has, since 2017, donated over $29 million in natural disaster aid, and this new facility only builds on that generosity.