#0044 The Future of Logistics Real Estate Demand

Confessions of a Recovering Landlord

Most of the time we talk about how to negotiate better office leases on this podcast. But today, we're going to talk about the Supply Chain - how its reliability became invaluable during Covid-19 and how its weaknesses showed up in a recent winter storm in Texas and how that affected industrial real estate. When you could no longer go to Wal-Mart, Jeff (Mr. Bezos to you) could bring it to your doorstep. Well, yes in the first case, no in the second. Listen to today's podcast to discover 5 forces shaping logistics real estate.

Prologis had an interesting article recently about logistics real estate demand and what they see in the future. Prologis is a large owner of industrial and logistics real estate. They say that decisions surrounding supply chains are becoming more holistic and data-driven then ever before and that we'll see huge demand for these properties in the future.

They are absolutely right-we're seeing the impact of this throughout the DFW area with giant warehouses popping up from Alliance airport in the far northwest to Waxahachie in the south. Doing a quick search on CoStar for available warehouses with 500,000 square feet or more showed 16 properties that could accommodate that, already on the ground. But here's the kicker, there were another 12 properties under construction and another 42 somewhere in the planning process. There is clearly incredible demand for this type of property.

Prologis mentioned 5 forces that will be shaping logistics real estate in the future. They are:

1. The long-term structural growth rate of logistics real estate has risen.
2. Technology and demographics are transforming retail.
3. Logistics best practices are going global.
4. Location matters more than ever for logistics real estate consumers.
5. The price elasticity of demand has decreased.

It would appear that the industrial surge will continue to grow in the near and distant future.