Logistics real estate demand is hitting all-time highs as retailers increase inventories to protect against supply chain disruptions and e-commerce activity continues to grow. Semi-annual outlook reports from some of the industry’s largest commercial real estate firms forecast tough market conditions for warehouse and logistics space amid heightened demand, which they say is ubiquitous. “Demand is spreading across many industries and e-commerce remains a strong driving force,” said logistics real estate company Prologis, which released data based on customer activity in its Industrial Business Indicator (IBI) Report
earlier this month. “Without any signs of easing, we expect tough market conditions to continue through 2022 and likely beyond.” The report showed that supply is not keeping pace with demand for logistics. According to the report, the market takeover in the first half of the year was 194 million square feet (MSF), more than double the increase in the same period last year. Logistics real estate vacancies fell to 4% in the second quarter, and Prologis said it predicts rents to rise above 10% in 2021. Markets with the largest rent increases include Southern California, New York / New Jersey, and Pennsylvania. “Customer activity is breaking records: Prologis’ IBI activity index rose from 59 in the first quarter to 71 in the second quarter. These results indicate sustained vigor as supply chains seek to replenish stocks amid rapid consumer purchases, which in turn creates strong future demand, ”the authors of the report write. “Logistics demand hit a record quarterly high of 110 million square feet (MSF) in the second quarter, resulting in an unprecedented 194 MSF takeover in the first half, more than double the same period last year. Demand was widespread among a wide range of clients, with the urgency of getting a seat an important factor. ” Commercial real estate giant CBRE released similar results earlier this month in its mid-year survey of the global economy, noting that economic recovery is underway
in the commercial real estate market despite concerns about Covid-19 and inflation, which is a boon for investors and property owners. According to forecasts, 2021 will be the strongest in the history of the commercial real estate sector. “Retailers and others will increase their inventory to protect against major disruptions. According to CBRE, more companies will outsource their supply chain operations, which means that third-party logistics companies will be competing for an even larger share of the leasing business. ”
Third report, from Transwestern Real Estate Services (TRS), showed that the industrial real estate market showed 102.2 million francs positive net takeovers in the second quarter, the third quarterly gain. Atlanta, Chicago, Dallas-Fort Worth and the California Inland Empire are the top markets according to Transwestern’s second quarter US industrial market report. These conditions create opportunities in the secondary markets, the firm said. “The industrial sector is operating at full capacity again, making it difficult to find a suitable location in major industrial markets,” said Matt Dolly, director of research at Transwestern, in a statement. “High rents and supply chain challenges are making secondary logistics markets increasingly attractive to tenants and investors, and we are closely monitoring markets such as Savannah, Las Vegas, Charleston, Phoenix and San Antonio, all of which have experienced expansion conditions. over a long period of time. three-year period “.