Logistics real estate experts are maintaining their long-term positive outlook for the sector despite worsening economic conditions as the COVID-19 pandemic ramps up in the United States.
A report from logistics real estate giant Prologis predicts that the need for inventory and the re-acceleration of e-commerce adoption due to the crisis will drive long-term demand for logistics real estate—despite the near-term effects of a slowing economy. The March 19 report was a follow-up to an earlier report pointing to the resiliency of the logistics real estate market, which is due in no small part to e-commerce related growth activity, according to Chris Caton, head of research for Prologis.
"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, multi-year trend that is likely to continue."
In the follow-up report, Caton and his colleagues point to five themes that are shaping near-term logistics real estate market conditions, with COVID-19 at the top of the list:
But despite the concerns, the overall outlook remains solid.
"The business has pretty good momentum, and was healthy heading into this, particularly in the U.S. but also in Europe and Japan," Caton said. "There was really good momentum. Deals were getting made, activity was good in the States. And there is a good amount of variety in our space."
All of which bodes well for the long term, he said.
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