NEWSWORTHY
LOGISTICS REAL ESTATE EXPERTSare maintaining their long-term positive outlook for the sector despiteworsening economic conditionsresulting from the Covid- 19 pandemicin the United States.
A report from logistics real estategiant Prologis predicts that the needfor inventory and the re-accelerationof e-commerce adoption due to thecrisis will drive long-term demand forlogistics real estate—despite the near-term effects of a slowing economy.The March 19 report, Logistics RealEstate Amid the Covid- 19 Outbreak,
was a follow-up to an earlier reportpointing to the resiliency of the logistics real estate market, which is due inno small part to e-commerce–relatedgrowth, according to Chris Caton, head of research forPrologis.
“In the current environment, e-commerce seems to
remain resilient,” Caton said in a mid-March interview,
emphasizing related demand for industrial facilities
that support last-mile and urban delivery needs. “The
concept of last-touch delivery [and] urban logistics
has been an important, multiyear trend that is likely to
continue.”
In the most recent report, Caton and his colleagues
point to five themes that are shaping near-term logistics
real estate market conditions. They are:
b Covid- 19 and recessions. The coronavirus outbreak inthe U.S. and Europe, and associated corrective measures,have brought economic activity to a near-standstill inthe hardest-hit markets. Logistics real estate demandwill be hit, although the extent of the downturn remainsto be seen.
b Strong momentum. Over the last several years, cus-
tomer demand has consistently outperformed expec-
tations, driven by supply chain modernization and
e-commerce.
b Resilience amid diverse demand. Overall propertyleasing activity remained consistent in February andearly March, even as the outbreak spread, due largelyto activity from those who serve essential daily needssuch as food/beverage, consumer products, and generalretailers.
b Shipments from China. Prologis expects a one-time
boost as goods start to flow through supply chains from
China.
b Slowing development starts. Developers have begun
to delay starts, and construction financing has declined
in availability.
Despite the concerns, the overall outlook remainssolid, according to Prologis. “The business has prettygood momentum and was healthy heading into this,particularly in the U.S. but also in Europe and Japan,”Caton said. “And there is a good amount of variety inour space.” All of which bodes well for the long term, hesaid. n
—Victoria Kickham
Demand for logistics real estatepersists in face of Covid- 19 andeconomic recession
