Cushman & Wakefield’s 2021 Global Logistics Outlook Has Supply Chain Management Implications
Cushman & Wakefield, one of the world’s leading real estate services companies, recently released its Global Logistics Outlook 2021. The report analyzes key factors affecting growth, global leasing dynamics and provides outlook for the industry.
“The unprecedented disruption caused by the COVID-19 pandemic and changing consumer behaviors has reshaped the future of the logistics industry by exposing vulnerabilities in the global supply chain and accelerating technological advancements. . As a result, various global trends have emerged, propelling the industry into new directions, ”said Jason Tolliver, Investor Lead, Logistics & Industrial Services, Americas, of Cushman & Wakefield.
The North American industrial market has grown despite the COVID-19 pandemic wreaking havoc around the world, as well as more local disruptions including hurricanes and wildfires. It has once again proven to be one of the most resilient types of assets. Although the new North American supply exceeded demand for the second year in a row, with 378 million square feet (msf) of completions, demand reached 287 msf, exceeding 200 msf for the seventh consecutive year.
“The lockdowns induced by COVID-19 led to a slight slowdown in demand in the first half of the year compared to previous years. However, even that, combined with the large volume of supply, has still not been enough to fully meet tenant demand and allow vacancy rates to start rising significantly, ”Tolliver said. “Towards the end of 2020, the industrial vacancy rate in North America stood at 4.9 per cent, an increase of just 30 basis points from 2019, and Canadian markets recorded vacancy rates. vacancy lowest at 2.5% and Mexico City at 3.0%.
“The logistics industry in Europe is grappling with supply constraints, resulting from a combination of a lack of developable land and strict planning regimes. Unlike the pre-global financial crisis (GFC) where speculative development accounted for around 80% of new builds, post-GFC was characterized by predominantly custom-built development that resulted in severe supply shortages in most of the main European logistics markets. . As speculative construction resumed after the closures, more products entered the market, pent-up demand was released and rental activity accelerated, ”said Lisa Graham, EMEA industrial research manager for Cushman. & Wakefield.
Based on year-end data, vacancies continue to decline in most major European logistics centers. A vacancy of around 4% on the Dutch and British markets and a vacancy of around 2% in Rotterdam, Lyon, Prague and Budapest, testify to a serious shortage of stock that, so far, an increase in speculative construction could not compensate. Additionally, increased demand from online retailers and 3PLs, as they expand their logistics footprint, offset vacancies created by tenant bankruptcies in 2020.
In general, the regional industrial market remains resilient. Of the 34 key markets covered in Asia Pacific, 15 are considered owner-friendly, six are tenant-friendly and the remaining 13 are neutral territory. The status quo has been largely maintained since the start of the year, with only Singapore showing a significant shift to become more tenant friendly, although this is limited to parts of the industrial market. This is in stark contrast to the office sector in the region, which has seen a much more definitive shift towards more tenant-friendly conditions.
“Industrial rents have shown steady growth since the start of the year in the main markets of India and Southeast Asia, where rents in Delhi, Ho Chi Minh City, Kolkata, Jakarta and Hanoi all grew by more than 2.5%. Rents remained broadly stable in Australia as they saw a slight increase of 2% in the Chinese logistics market, due to increased demand for online shopping absorbing some of the vacancy, ”said the Dr Dominic Brown, Global Head of Demographic Analysis. , APAC manager for Cushman & Wakefield.
“The global logistics industry not only demonstrated resilience during the tight shutdowns in the first half of the year, but also benefited from consumer and business responses to the pandemic in the second half of the year. The expansion of e-commerce, both geographically and by product line, will be a key driver of new demand for space over the next decade, ”Tolliver said. “In a post-COVID-19 world, more emphasis will be placed on using real estate to leverage costs across the entire supply chain, better positioning businesses as they navigate in a B2C business model, relocation, inventory management, labor issues, transportation and ESG. . Together, these factors will govern the localization strategy.
Brown told SCMR in an interview that “demand drivers” highlight gaps in supply chains that can potentially be filled by the expanded range of logistics asset types.
“To the extent that supply chains link production to consumption, these gaps can be in the same region or in several regions,” he concluded.
About the Author
Patrick Burnson, Editor-in-Chief Mr. Burnson is a writer and publisher of numerous publications specializing in international trade, global logistics and supply chain management. He is based in San Francisco, where he provides a Pacific Rim perspective on industry trends and forecasts. He can be contacted at his office in the city center: [email protected]