We use cookies to provide you with a better experience. By continuing to browse the site you are agreeing to our use of cookies in accordance with our Cookie Policy.
  • INDUSTRY PRESS ROOM
  • SUBMISSIONS
  • MEDIA FILE
  • Create Account
  • Sign In
  • Sign Out
  • My Account
Free Newsletters
  • MAGAZINE
    • Current Issue
    • Archives
    • Digital Edition
    • Subscribe
    • Newsletters
  • STRATEGY
  • GLOBAL
  • LOGISTICS
  • MANUFACTURING
  • PROCUREMENT
  • VIDEO
    • News & Exclusives
    • Viewer Contributed
    • CSCMP EDGE 2023
    • Upload your video
  • PODCAST ETC
    • Podcast
    • White Papers
    • Webcasts
    • Events
    • Blogs
      • Reflections
      • SCQ Forum
    • Mobile Apps
  • MAGAZINE
    • Current Issue
    • Archives
    • Digital Edition
    • Subscribe
    • Newsletters
  • STRATEGY
  • GLOBAL
  • LOGISTICS
  • MANUFACTURING
  • PROCUREMENT
  • VIDEO
    • News & Exclusives
    • Viewer Contributed
    • CSCMP EDGE 2023
    • Upload your video
  • PODCAST ETC
    • Podcast
    • White Papers
    • Webcasts
    • Events
    • Blogs
      • Reflections
      • SCQ Forum
    • Mobile Apps
Home » Strong demand for logistics real estate continues

Strong demand for logistics real estate continues

Reports show tight capacity for warehousing, logistics space continues; new opportunities arise in secondary markets.

store-5619201_640.jpg
August 13, 2021
Victoria Kickham
No Comments
Demand for logistics real estate is reaching record highs as retailers boost inventory levels to protect against supply chain disruptions, and e-commerce activity continues its strong pace.

Mid-year outlook reports from some of the industry’s largest commercial real estate firms are forecasting tight market conditions for warehousing and logistics space amid the heightened demand, which they say is widespread.

“Demand is spread across many industries, and e-commerce remains a strong driver,” according to officials at logistics real estate firm Prologis, which released data based on customer activity in its Industrial Business Indicator (IBI) report earlier this month. “With no signs of abating, we expect tight market conditions to persist through 2022 and likely beyond.”

The report showed that supply is having a tough time keeping up with logistics demand. Market absorption in the first half of the year was 194 million square feet (MSF), more than double the same period last year, according to the report. Logistics real estate vacancies fell to 4% in the second quarter, and Prologis said it predicts rent growth above 10% in 2021. Top rent growth markets include Southern California, New York/New Jersey, and Pennsylvania.

“Customer activity is setting records, with Prologis’ IBI activity index rising from 59 in Q1 to 71 in Q2. These results indicate sustained robust activity as supply chains race to restock amid rapid consumer purchasing, in turn creating strong future demand,” the report’s authors wrote. “Logistics demand reached a record quarterly high of 110 million square feet (MSF) in the second quarter, bringing absorption for the first half of the year to an unprecedented 194 MSF, more than double from the same period last year. Demand was broad-based across a range of customers, with urgency to secure space a major factor.”

Commercial real estate giant CBRE released similar results in its mid-year global outlook earlier this month, noting that the economic recovery is progressing in the commercial real estate market despite concerns about Covid-19 and inflation—a boon to investors and property owners. According to the outlook, 2021 will be the strongest on record for the commercial real estate sector.

“Retailers and others will increase their inventories to cushion against major disruptions. More companies will outsource their supply chain operations, which means third-party logistics companies will claim an even larger share of leasing activity,” according to CBRE.

A third report, from Transwestern Real Estate Services (TRS), showed that the industrial real estate market posted 102.2 MSF of positive net absorption in the second quarter, a third straight quarterly gain. Leading markets include Atlanta, Chicago, Dallas-Fort Worth, and California’s Inland Empire, according to Transwestern’s second-quarter U.S. industrial market report.

The conditions are creating opportunities in secondary markets, the firm said.

“The industrial sector is once again firing on all cylinders, making it increasingly difficult to find suitable space in prime industrial markets,” Matt Dolly, research director at Transwestern, said in a statement. “High rents and supply chain issues are making secondary logistics markets increasingly attractive to occupiers and investors, and we’re closely following markets such as Savannah, Las Vegas, Charleston, Phoenix, and San Antonio, all of which have experienced expansionary conditions over a three-year period.”
KEYWORDS CBRE ProLogis Transwestern Real Estate Services
    • Related Articles

      Real estate firm predicts strong demand for logistics and distribution space through 2016

      Demand for inventory, e-commerce fuels long-term outlook for logistics real estate

      Despite mid-year dip, rents for logistics real estate rose worldwide in 2020

    Victoria Kickham, an editor at large for Supply Chain Quarterly, started her career as a newspaper reporter in the Boston area before moving into B2B journalism. She has covered manufacturing, distribution and supply chain issues for a variety of publications in the industrial and electronics sectors, and now writes about everything from forklift batteries to omnichannel business trends for Supply Chain Quarterly's sister publication, DC Velocity.

    Recent Articles by Victoria Kickham

    Logistics economy expanded in September

    Survey: Freight brokers unfazed by industry challenges

    Logistics economy slowed in July

    You must login or register in order to post a comment.

    Report Abusive Comment

    Most Popular Articles

    • Walmart to open fifth “next-gen” fulfillment center in 2026

    • 53% of procurement leaders expect to increase their spending in 2024

    • U.S. faces permanent labor shortage, says University of Tennessee economist

    • Pepsi exec highlights four key structural changes in the supply chain

    • What skills will you need in the Age of AI?

    Featured Video

    Edge2023 innovationtheater here technologies

    CSCMP EDGE 2023 Innovation Theater: Enabling Peak Performance in Last-Mile Delivery Through Private Mapping and Custom Routing - HERE Technologies

    CSCMP EDGE 2023
    At HERE Technologies, we understand the hypercompetitive world of e-commerce, retail, and parcel delivery is increasing in complexity every day. End customers demand ever-increasing delivery performance levels regarding on-time arrivals, flexibility in delivery schedules, pricing and payment options, and more....

    FEATURED WHITE PAPERS

    • Balancing Act: How Freight Brokers Help Shippers Navigate Uncertainty

    • Quarterly Freight Data Report: Q3 2023

    • A Brighter Future: How COVID-19 Continues to Change Freight Procurement Strategies for the Better

    • Five questions to ask before electrifying your indoor forklift fleet

    View More

    Subscribe to Supply Chain Quarterly

    Get Your Subscription
    • SUBSCRIBE
    • E-NEWSLETTERS
    • ADVERTISING
    • CUSTOMER CARE
    • CONTACT
    • ABOUT
    • STAFF
    • PRIVACY POLICY

    Copyright ©2023. All Rights ReservedDesign, CMS, Hosting & Web Development :: ePublishing