New search by PrologiesThe global leader in logistics real estate has highlighted the global supply chain crisis, with logistics space at an all-time low, a slowdown in the flow of goods and rising construction costs.
The new paper of the Prologis research team, constant disturbance, explores the shift that customers make to logistics from “just in time” to “just in case” – or the ever-changing shift toward flexibility. This shift will create a strong tailwind of demand in logistics real estate and could prolong or exacerbate the current space shortage.
- Strong inventory sales ratios are key to the future supply chain. The disruptions will continue to flow goods beyond the pandemic, driven by structural forces in climate, geopolitics and labour.
- High inventories will require 800 million square feet (74.3 million square meters) of logistics real estate or more to fix shortages and build resilience. Logistics real estate leasing has not yet reflected this demand because companies need to focus first on immediate inventory challenges.
- Portal sites are preparing to benefit as a first step in the end-of-consumption of supply chains. Since these locations generally have significant barriers to the development of new logistics, demand is expected to outpace supply.
Eva van der Pluijm-Koc, Director of Research and Strategy at Prologis commented: “During the third quarter, we saw a record 3.0% drop in job vacancies in Europe. This trend has already indicated an increase in demand for space and early inventory.
“In the UK, due to Brexit, the urgency to build supply chain resilience was somewhat predictable, but we also saw that the disruption was more severe than expected in Europe, building inventory demand has traditionally been low. That is changing now. slowly and leads to deficiency.
“Across Europe and the UK, the results show that demand for logistics space and increased inventories will continue as part of customers’ goal to build resilience.”
Moreover, Prologis’ Current Industrial Business Index (IBI), a company-owned quarterly survey of customer activity and sentiment, reveals that strong retail sales and supply chain challenges are driving rental urgency. US net uptake reached a record 115 million square feet (10.7 million square meters) in the third quarter of 2021 and 280 million square feet (26 million square meters) year-to-date — more than double the same period in the year past, pushing vacancies to a new low of 3.9%.
click here to download a file constant disturbance Prologies report.