Tag Archive for: industrial real estate demand

TheĀ coronavirus pandemicĀ has reshaped the global logistics market in fundamental ways, spurring its long-term growth, but also putting new stress on the system as consumers adopt online retail sales more quickly than they might have otherwise,Ā according to a new reportĀ by industrial real estate giantĀ Prologis.

That could lead to demand for 4B SF of new logistics stock.

The report, “Forever Altered: The Future of Logistics Real Estate Demand,” said perhaps the main driving force in change for the industrial sector will be the accelerated growth inĀ e-commerce.Ā Though the pandemic will end, that will remain as one of its prime legacies.

E-commerce penetration will continue to be robust post-pandemic for a number of reasons. One is that many consumersĀ overcameĀ barriers to e-commerce during the pandemic, and they aren’t going back, the report says.

Also, innovation and supply chain investments made during the pandemic will hone the competitiveness of online options for retailers. That will be especially the case for retail segments with low e-commerce penetration before the pandemic, such asĀ groceryĀ retailers and home improvement specialists, Prologis predicts.

“Consumer expectations have increased in a permanent way,” the report notes. “Prologis Research forecasts that global e-commerce penetration will rise by 150 basis points a year over the next five years. Physical retail will increasingly require rapid replenishment operations to compete.”

Growth in consumption-oriented uses will drive growth inĀ logisticsĀ real estate, even as production-oriented uses decrease, Prologis also found. Consumption is now the main driver of demand for logistics space on the global level, with retail sales having a higher correlation with logistics demand growth than more traditional uses of such space, such as manufacturingĀ or wholesale trade.

These changes will naturally mean opportunity for industrial real estate owners and developers, but there will also be growth pains in logistics going forward.

“The resilience of the supply chain is being tested as companies expand globally, in turn driving the need for modern stock and decentralized networks,” the report notes. “Coupled with a rising consumer class, this worldwide upgrade should generate the need forĀ 3 toĀ 4BĀ SF or more of modern logistics stock over the next cycle.”


Source: Bisnow

The ink isnā€™t dry on Blackstone Groupā€™s $18 billion buy of a U.S. warehouse portfolio, and itā€™s already negotiating to sell part of it.

The company, which finished its transition into aĀ corporationĀ this month, is drumming up interest from potential buyers for pieces of the GLP Pte portfolio, Bloomberg reported. Prologis is in private discussions to buy one such portfolio, valued at $1 billion.

Blackstoneā€™sĀ $18.7 billionĀ deal for the Singaporean companyā€™s 179 million-square-foot warehouse portfolio is one of the largest industrial real estate deals ever.

Selling non-core or non-strategic pieces of a recently required purchase isnā€™t uncommon. Blackstone applied the same strategy in 2007 when it sold off parts of its $40 billion acquisition of Equity Office Properties Trust.

On the whole, the warehouse sector has seen little supply, high demand and high prices, with available industrial and logistics real estate rising slightly for the first time in 34 quarters, according to a CBRE report. Demand for warehouse and distribution reached anĀ 18-year high in 2018.

Large owners are optimistic that there will continue to be institutional investment in industrial real estate. As Prologis negotiates for a piece of Blackstoneā€™s new holdings, itā€™s also in advanced talks to buy anotherĀ $4 billion portfolioĀ from Black Creek Group which spans 37.6 million square feet.

Colony Capital is weighing the sale of itsĀ $5 billionĀ industrial in holdings on the heels of selling another warehouse portfolio for $104.6 million.


Source: The Real Deal