Developers Struggle to Find Land Amid Bullish Logistics Demand
A lack of available speculative buildings is another constraint.
Real estate logistics demand is bullish across the globe, even compared with the elevated levels seen over recent years.
This is the key finding of JLL’s inaugural survey on global logistics real estate from a poll of 720 logistics experts in 43 countries and territories across the firm’s global network in April.
In the survey, 74% of the respondents said they expected growth of more than 5% in logistics demand over the next three years with 28% predicting growth of higher than 29%. E-commerce demand was seen as being significantly higher in the period by 71% of the experts.
However, the survey found developers are struggling to secure suitable development land and planning permission for logistics facilities in many markets globally and leasing decisions are being put on hold due to a lack of the right space.
More than two out of every five respondents, 43%, said they consider ‘limited availability of entitled land’ as the number one constraint on occupier demand. Over one out of every three cited a ‘lack of available speculative buildings’ as the main constraint.
Technology was listed as a high priority in the poll.
Fifty-eight percent of the respondents said they expect smart technologies to be very important for building design with 49% calling the use of automation and robotics very important.
On sustainability, 73% of the experts surveyed said improving energy efficiency was the highest priority.
Regarding supply chains, 90% agreed or strongly agreed automation and robotics will have a strong impact while nearly as many, 87% anticipated increasing digitization of the networks and processes.
Prologis made similar observations about the category’s dynamics at the beginning of the year, noting that the logistics sector was a resilient, relatively safe harbor for investment in 2020, which led to potential areas of oversupply. However, it went on to predict that structural demand hurdles and increasing replacement costs would mean new supply wouldn’t be likely to meet demand in most areas, at least not this year.