The coronavirus (COVID-19) pandemic highlighted the importance of good supply chain management and logistic networks. While neither investment volumes, nor take up are immune to the economic effects of the virus, in 2020, the sector was in a good place to face a challenge. The pandemic has accelerated processes that were a long time in the making: With many brick-and-mortar shops closed during nationwide lockdowns, the e-commerce sector surged, boosting demand for warehouse space.
Meanwhile, there are additional factors that influence the role of industrial and logistic properties such as the United Kingdom’s Brexit journey and the United States’ aspirations to decrease their dependence on Chinese imports. Coming up with a forecast on the sector’s future is a challenging task but one thing is for sure – industrial and logistic real estate is an asset class to keep an eye on.
In the first half of 2020, the ten leading European markets saw take up of over 12.2 million square feet of industrial and logistic space. While leasing activity fell below the half-year average of the last five years, the decrease was minor considering the devastating effects of the pandemic on the global economy, manufacturing output and consumer sentiment.
Industrial and logistic real estate in the UKRental costs across industrial and logistic properties vary widely across countries and regions but the overall high demand in the recent years keeps rental costs growing. In North America, the average asking rent for big box properties increased by 50 percent since 2010, reaching 5.29 U.S. dollars in 2020. Among the most expensive markets are Northern Central (NJ), Inland Empire (CA), and Houston (TX).
Existing big box space size in North AmericaReal estate investment trusts (REITs) are public companies that own and lease income-generating real estate. REITs often specialize in a specific asset class. In the United States, for example, one of the leading self-storage REITs Public Storage Inc. (PSA), generated nearly 580 million U.S. dollars in rental income. Outside of the U.S., the company operates in several European countries, such as the United Kingdom, the Netherlands, Belgium, Sweden, France, and Denmark.
Leading UK self-storage brandsThe coronavirus (COVID-19) pandemic highlighted the importance of good supply chain management and logistic networks. While neither investment volumes, nor take up are immune to the economic effects of the virus, in 2020, the sector was in a good place to face a challenge. The pandemic has accelerated processes that were long time in the making: With many brick-and-mortar shops closed during nationwide lockdowns, the e-commerce sector surged, boosting demand for warehouse space.
Meanwhile, there are additional factors that influence the role of industrial and logistic properties such as United Kingdom’s Brexit journey and United States’ aspirations to decrease their dependence on China imports. Coming up with a forecast on the sector’s future is a challenging task but one thing is for sure – industrial and logistic real estate is an asset class to keep an eye on.
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