Institutional investors are looking to logistics property to deliver increased returns from higher rents, as the growth in multi-channel retailing drives growth in the market.
The suggestion comes from Henderson Global Investors in a report entitled: “The impact of technology on real estate: Implications for retail and logistics”.
It points out that European retailers are estimated to need as much as 25 million sq m of additional logistics space in the coming five years, significantly surpassing previous requirements.
Demand in emerging markets, where the supply chain network is less established, could be greater still.
It points out that while transaction volumes are up, industrials still account for a modest proportion of overall investment and the continued lack of prime product will continue to hold this back to some extent. Nevertheless, this sector should grow in importance.
“With rapidly growing demand and limited supply that meets modern requirements, there could be a structural uplift in rent levels for the right product. And over time, as the sector becomes more liquid and attractive as an investment market, we could see a lowering of equilibrium yields,” the report said.