Warehouses beat malls as virus fuels record global investment

London

WAREHOUSE deals accounted for a record share of global commercial real-estate investment in the first half of the year as the surge in e-commerce during lockdown fuelled demand for logistics properties.

About US$75 billion was spent on industrial and logistics properties in the first six months, or about 20 per cent of total investment, said broker Savills.

Warehouses surpassed stores to become the third-most popular real-estate asset class after offices and homes, the firm said in a report based on Real Capital Analytics data.

"The current global e-commerce boom, accelerated by consumers shifting their purchasing online throughout the pandemic, has been a major catalyst for this sector's growth," Paul Tostevin, world research director at Savills, said in a statement.

Online sales are forecast to increase by 31 per cent in Western Europe this year, accounting for about 16 per cent of total retail sales, said the Centre for Retail Research.

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In the US, the e-commerce market share will reach 14.5 per cent, eMarketer research shows.

That has led to "unprecedented levels of investor demand", with companies such as Amazon on a leasing spree to support expansion, noted the Savills report.

The world's biggest real-estate investors including Blackstone Group and GIC Pte have made substantial and lucrative bets on warehouse properties over the past decade.

Blackstone Group has spent about US$40 billion on warehouses around the world in the past two years alone, RCA data showed.

The rise in demand for warehouse properties has also propelled companies including Prologis and Segro to the top of real estate investment trust (Reit) indexes, while mall landlords have tumbled in value.

The amount of capital invested in warehouses annually rose sixfold in the decade through 2019, when US$196 billion of deals were completed, Savills said in the report.

In the US, deals jumped tenfold in the same period. BLOOMBERG