The best investment theses for real estate are almost always underpinned by their relevance to solving the greatest social and economic problems of the day. Among the most pressing of issues currently is the rebuilding and reconfiguring of global supply chains and better ensuring their future resilience.
The provision of logistics real estate is a part of the solving of this problem – but likely not just any logistics real estate assets will be fit for purpose. Rather, the solution lies with the delivery of state-of-the-art stock with the highest ESG credentials, in the best submarkets and allowing for the most efficient distribution of goods. They must be highly responsive to occupier needs.
Early in the pandemic we made a case for modern logistics based not only on its long-term structural drivers but also the acute and urgent need of these facilities to accommodate a massively expanded E-commerce capability given the urgency of home delivery of goods to maximise social distancing policies. Indeed, what followed through 2020 and 2021 was a considerable acceleration of E-Commerce volumes globally and this boosted absorption and substantially pushed up the rental and capital values of logistics assets.
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