Logistics demand set for record year

Global Real Estate Perspective, November 2021

Ongoing supply chain disruptions and pressure on critical supply hubs are posing a challenge to the global economic recovery. Given globalized supply chains’ reliance on goods being manufactured abroad, labor shortages and bottlenecks at cargo shipping ports have led to rising prices and shortages of goods, while factory closures in China have raised fears of further disruptions to supply chains toward the end-of-year peak shopping season. Industries servicing supply chain operations such as Logistics & Distribution and 3PL operators have seen a spike in demand, which is expected to continue with the holiday season around the corner.

Demand for logistics space remained extremely robust across all three regions in the third quarter, to the extent that new supply is struggling to keep up with the weight of demand in some markets. With supply tight, aggregate vacancy rates are sub-5% in both the U.S. and Europe. These supply and demand dynamics are supporting solid rental growth, which is evident across all three regions.

Future trends: Disruption driving focus on supply chain resilience and automation
  • Outlook for 2022: Given ongoing disruption to supply chains, a key focus will be on ensuring that global supply chains remain resilient during the peak shopping season in the final quarter. As such, industries servicing supply chain operations such as Logistics & Distribution and 3PL operators will continue to benefit from the need to navigate short-term supply chain pressures.
  • Long-term: Labor shortages – notably, for example, the lack of heavy goods vehicle (HGV) drivers in the UK - will push companies to explore automated systems and robotics to assist with distribution and transportation operations. According to JLL’s The Future of Global Logistics Real Estate survey, investing in automation and robotics is seen to be the first choice to improve supply chains in the future, followed closely by the digitization of supply chains.