Logistics drives demand for industrial real estate

Cushman & Wakefield has released a comprehensive white paper entitled “The Changing World of Trade” that indentifies winning strategies for adapting to the new “demand economy.”

The report suggests that owners, occupiers and investors need to respond to unprecedented trends in technology, demographics and infrastructure that are transforming global supply chains across the retail, industrial and logistics real estate sectors.

Company spokesmen said that their expectation is that as the global recovery gains momentum the significant pent-up demand will result in significant growth in global trade. A projected return by 2014 to the long-term trade growth trend of roughly 9.5% per year could result in global trade flows reaching $45 trillion by 2021 compared to just $6.5 trillion in 2001 when China joined the World Trade Organization.

“In major markets around the world, countries are positioning themselves to capitalize on the growth in international trade by investing heavily in infrastructure improvements such as ports, airports, highways, railways, industrial parks and most importantly intermodal hubs,” said Maria Sicola, executive managing director and head of Cushman & Wakefield’s Research in the Americas.  “Meanwhile, governments are focused on negotiating new trade agreements and easing foreign direct investment regulations.”

The retail sector today is undergoing rapid change, as it becomes more global, urban and specialized due to the rapid rise of online shopping, mobile technology and changes in consumer spending patterns. The effects of customer demand on real estate include changing location strategies and increasing investments in reducing operating expenses. To meet the demands being driven by e-commerce, technology and transportation costs, companies are actively streamlining their fulfillment processes – improving logistics to maximize efficiencies in inventory, service time and delivery – which is driving demand for high-quality space.

John Morris, Cushman & Wakefield’s Industrial Services Lead, Americas, perhaps said it best:

“Seismic changes in retail requirements are putting new pressures on shippers who are expanding to developing economies while concurrently struggling to adapt to the challenges of high-demand retailing in increasingly dense cities.”