If there is one asset class in the real estate sector where competition for assets and capital is concentrated in two distinctive areas, it is logistics.
Globally, the scrap for the development of, and investment in, the largest logistics facilities is dominated by three operator-managers: Prologis, Global Logistic Properties and Goodman Group. Between them they manage approximately 1.5 billion square feet of space valued at an aggregate $148.6 billion. The three global mainstays are flanked regionally by groups such as Logicor in Europe and e-Shang Redwood in Asia. These organizations are largely responsible for the creation, management and, often, ownership of the lion’s share of institutional grade industrial real estate and, between them, mop up most of the sector’s occupational demand.
It is little wonder, then, that the competition to capitalize their respective asset bases and development pipelines is monopolized by a similarly-sized cohort of institutional investors, with little room for new entrants. Heavyweights including China Investment Corporation, Canada Pension Plan Investment Board, Government of Singapore Investment Corporation and APG Asset Management have established capital footholds in the investment products offered by the sector’s giants, sometimes in addition to ownership positions in the firm’s themselves. However, for every institutional investor invested, there are many more which are not. Some queue to be included in future offerings. Others take different routes to gaining market share.
Investing in Logistics
The February issue of PERE magazine featured our special supplement, Investing in Logistics. For more on the sector, see our stories below:
One popular conduit for investors bent on engaging the logistics market but not willing to wait for an offering from one of the ‘Big Three’ is via the small-to-medium size building segment. The list of investment managers and operators conducting their business in this area is rapidly growing, spurred by the exponential growth in e-commerce and sophistication in distribution practices. Last-mile, or even last-hour, logistics as a popular alternative for investors keen to access the sector was a clear trend in PERE’s Investing in Logistics special publication last year. It features prominently once again in 2018.
As e-commerce evolves, demand will grow for expertise in high quality logistics facilities in prime locations, both at the central distribution and the more regionally-orientated final-journey delivery levels.
Our special focus on the sector features analysis and insights from both these distinctive parts of the logistics property equation, with ample focus on the activities of the key protagonists in each.