Shopping and shipping: e-commerce and the new world of logistics
When you think of the world’s most advanced technology companies, you think of Google, Amazon, ...
Growth in ecommerce and strong occupier demand is behind investor decisions to broaden their involvement in regional and last-mile logistics facilities.
Pacific and Industrial Logistics REIT (PILR) is looking to raise £110m for acquisitions whch include logistics facilities valued at approximately £170m.
Since listing last April, the company has built up a portfolio of 15 logistics assets to take advantage of the growth in ecommerce.
According to a statement released by PILR, the last-mile industrial and regional logistics real estate market currently benefits from a number of supportive structural factors.
These include strong occupier demand, a decline in lettable space, increased levels of ecommerce activity, affordable rents with potential for rental increases and availability of acquisitions.
Amazon’s announcement last month that it would be acquiring Whole Foods was seen by some as a means to broaden its last-mile logistics capabilities in urban centres across the world.
PILR estimates that for every £1bn of new online sales, 1,125 million square foot of new distribution space is required – the current annual average demand growth is approximately 4.5 million square foot.
At the same time, supply of lettable space in industrial and logistics real estate across the UK has declined, and is more than one third lower than the most recent peak of 2009.
PILR added that UK planning permission did not support growth to catch-up with increased demand in key logistics locations, leading to a lack of speculative development of new premises.