Most Read Articles
Real estate firm predicts strong demand for logistics and distribution space through 2016
Commercial real estate giant JLL believes that global demand for logistics and distribution space will continue to be strong through 2016. The supply of leasable property, however, will remain weak, and rents are expected to continue to rise through 2016 and into 2017.
These predictions are based on a survey of 650 of the company's market experts around the world and were reported in JLL's "Winter 2016 Global Logistics Sentiment Survey."
The JLL sentiment survey asks market experts about whether they see a trend increasing, decreasing, or staying the same. These trends cover: 1) demand for leasable logistics space among corporations, 2) available supply of logistics space, and 3) rents. The results reflect the difference (or balance) between the number who said "increasing" and the number who said "decreasing," expressed as a percentage of all responses.
Globally, a positive balance of 49.4 percent of JLL market experts expect demand for logistics and warehousing space to increase, which highlights a strong positive sentiment that rents will rise further. However, survey results from JLL's three business regions—the Americas; Europe, Middle East, and Africa (EMEA); and Asia Pacific—indicate that some markets feel less strongly that demand will increase than others. The balance for demand in the Americas for 2016 was 45.4 percent, down slightly from last year, when it was 50.4 percent. According to the report this drop occurred because sentiment is not as high in Canada as it was last year, and respondents in the U.S. market are slightly less optimistic than they were in 2015.
JLL is more optimistic about demand growing in EMEA (balance of 51.7 percent) and Asia (balance of 56.4 percent). This differs from last year, when optimism was stronger for the Americas than for EMEA and Asia.
While the balance for demand is positive, the balance for supply (or the difference between the number who said supply would increase and the number who said it would decrease, expressed as a percentage of all responses) was negative at -11.9 percent. In other words, JLL executives expect the availability of leasable property will in general continue to contract around the world. However that number is up from 2015, when the balance was -23.0 percent. Supply is only expected to grow in the Asia Pacific region, but the net positive balance is down markedly, from 32.7 percent to 13.0 percent.
The report also said that a balance of 50.4 percent of JLL respondents believe that rents will increase. However, this balance is down from last year, when it was 60.0 percent. JLL believes this drop is mostly due to an expectation that rent growth will trail off in Canada and Brazil. Additionally, some markets in the United States expect to see rents peak in mid or late 2016 and then level off.
Join the Discussion
After you comment, click Post. If you're not already logged in, you will be asked to log in or register.
We Want to Hear From You! We invite you to share your thoughts and opinions about this article by sending an e-mail to ?Subject=Letter to the Editor: Quarter 2016: Real estate firm predicts strong demand for logistics and distribution space through 2016"> . We will publish selected readers' comments in future issues of CSCMP's Supply Chain Quarterly. Correspondence may be edited for clarity or for length.