Real estate giant reports customer resilience in the face of Covid-19
Industrial real estate market continues to evolve as e-commerce, other trends drive demand for warehousing, logistics.
Commercial real estate giant Prologis said the majority of its customer base around the world remains at least partially operational and that e-commerce and other trends driven by stay-at-home orders are helping to drive supply chain resiliency in the face of the coronavirus pandemic, according to an April report.
The company said logistics real estate demand will continue to evolve as consumer behaviors and supply chains shift, detailing industry trends in the fourth installment of a special report on Covid-19 and its impact on the logistics real estate market. The report analyzes the company's diverse customer base, which consists of a roughly 1 billion square-foot portfolio in which no single industry accounts for more than 15% of base rent, according to the company. The company said nearly 60% of its customer industries are growing despite disruptions caused by the coronavirus.
Key findings of the April report include:
- Despite the disruption of the coronavirus, roughly 95% of Prologis' customers across the globe remain at least partially operational. In particular, this has been driven by stronger consumer demand via e-commerce. With companies shifting to accommodate users sheltering in place, e-fulfilment operations accounted for nearly 40% of Prologis' new leasing in March and April, the company said.
- China's work stoppages caused shipments to double at a time when many customers had no store shelves to fill. This drove increased need for short-term space, with a sharp increase in demand from logistics companies that specialize in supply chain management. Short-term leases rose 40% year-over-year in the 30 days through April 17, 2020, according to the report.
- Consumer habits may be slow to return, as evidenced by weekend traffic in China, which remains well below pre-Covid-19 levels even with lifted restrictions. "Preferences for home delivery and dining in could prove sticky, driving continued demand for grocery and essential goods," the researchers also said.