Driven by an e-commerce boom, industrial real estate is in the midst of a golden age that shows no signs of waning, despite lingering concerns about the long-term health of traditional retailers, a group of industrial property managers said during a panel discussion at the 2017 Fall Meeting in Los Angeles.

Warehouse vacancy rates remain at all-time lows, rents are at record highs, and new construction continues to grow at a rapid clip. “The market has never been stronger,” said panel moderator Rene Circ of CoStar Portfolio Strategy, which provides commercial real estate analysis and portfolio strategy.

New markets for industrial space are emerging in areas like Nashville, central Pennsylvania, and Cincinnati as Amazon and other online retailers look to move closer to their customers and shorten delivery times for their products.

Larry Harmsen, an executive with Prologis, an international firm focused on logistics real estate, said he believes these new markets are here to stay and that the overall industry outlook is as positive as he has ever seen it over his three-decade career. “We don’t see it ending any time soon,” he said.

Much of the discussion focused on the rapid expansion of e-commerce, which Circ said has been the primary driver for growth in the industrial market. Circ said that e-commerce sales have jumped 15 percent annually since 2010 and do not appear to be slowing down. Still, online sales make up only 8 to 10 percent of total retail sales in the United States, suggesting there is room for growth.

Even as it has grown, the e-commerce sector has been reshaping itself over the past decade, a dynamic that has had profound implications for the industrial real estate space, Circ said. He cited the ratio of inventory to sales for online retailers, which started rising in 2012 after a long period of increasing inventory efficiency. Circ said while that trend in the past has preceded a recession, the current spike in inventories is driven by an entirely different factor. “What’s actually happening is e-commerce over the past 17 years has switched to competing on price to competing on convenience,” he said.

At roughly 600 million square feet (56 million sq m), e-commerce is still a quite small part of the overall warehouse market, he said, representing a mere 4 percent of the total industry. But in terms of new demand, it is the primary driver, with Amazon leading the way. The online behemoth currently has an estimated 140 million square feet (13 million sq m) of warehouse space, and some analysts predict the company could double as it extends its rapid-delivery network nationwide.

Harmsen said while Amazon is clearly the largest player in the online retail space, the growth trend transcends the online giant. “There’s a lot of other energy, effort, and investment being put into e-commerce delivery through all the other retail channels,” he said. “We think it’s easily going to double.”

Harmsen said that online sales make up a much bigger share of overall retail activity in countries such as Germany and the United Kingdom, which could be an indicator that the U.S. sector has considerable room to grow, perhaps to 15 to 20 percent of total sales.

Still, as consumers increasingly turn to online marketplaces, brick-and-mortar retailers are among the biggest losers, with some 55 percent reporting negative same-store sales year-over-year in 2016. “Clearly, somebody is not doing well,” Circ said.

“We’re very worried about retailers in general and the structure of the business,” said Charles Forbes, director of core investments for Cabot Properties, a private equity real estate investment firm with a heavy focus on warehouse space. But Forbes and other panelists said that new online companies continue to emerge and create additional demand for warehouse space, even as traditional retail contracts.

Dwight Merriman, head of real estate for investment firm Black Creek Group, said it is likely that online retailers will find innovative uses for warehouse space abandoned by traditional retailers. For example, he said online food companies looking for refrigerated warehouse space could adopt space previously occupied by clothing retailers.

Circ said while retailers continue to shutter stores nationwide, those closures have yet to have a dramatic effect on warehouse space. For example, Macy’s recently announced that it was closing dozens of stores around the United States but only shut down a single 200,000-square-foot (19,000 sq m) warehouse.

Harmsen said his company built warehouses for two major retailers that have gone bankrupt, but has already leased one facility and is poised to find a tenant for the second one in the near future. He said that some e-commerce firms will fail as well, but overall the market will continue along its current track. “I still think it will be a net-positive story at the end of the day,” he said.