If the fundraising numbers are anything to go by, logistics’ long run in private real estate still has legs.

The sector accounted for 40 percent of all sector-specific private real estate fundraising last year – its highest such share over the past five years, according to PERE data. Industrial was also the only property type to have seen its percentage of total fundraising increase over that period.

The drivers of investor interest in industrial real estate remain robust. According to a May report from Deloitte, a projected 15 percent annual growth in e-commerce sales, along with rising business inventories and higher gasoline prices, is expected to increase demand in the sector by an additional 850 million square feet over the next five years.

At the same time, the outlook for logistics is not entirely rosy. The report also stated that the growth in demand is expected to fall below 1 percent annually because of rising supply and higher costs of capital in the face of a potential economic slowdown in 2020. Moreover, according to the firm’s 2020 commercial real estate outlook survey, industrial was the only sector on which respondents had a neutral outlook on rental growth. This was compared with very favorable or somewhat favorable outlooks for all other sectors, including offices, retail, multifamily, hospitality, mixed-use and nontraditional.

But while those headwinds have been widely recognized, one challenge has been less prominently discussed in research reports and conferences: the labor shortage faced by the logistics tenant base at large. A 2017 World Bank study noted that businesses globally are having difficulty recruiting and retaining skilled staff in logistics and supply chain management. The reasons for the shortages – which include perceptions of the industry as having uninteresting work, unfavorable working conditions and low wages – are unlikely to go away anytime soon.

Of course, where there is an issue, there should be a solution. And some of the largest managers in the space have been tackling this tenant issue head-on. A labor shortage, after all, affects a tenant’s ability to run its business effectively. For example, an average European facility employs over 100 people per 107,639 square feet of floor space, according to a March report from Prologis, the world’s largest industrial real estate company.

As Martina Malone, Prologis’s head of global capital raising, remarked at this week’s inaugural Women in Real Estate Forum in London: “One of the biggest pain points for our tenants is labor, labor, labor.” In response, the firm has launched an initiative working with local workforce programs and job placement services to help its tenants find staff and make them more likely to stay in place.

Sylvia Slaughter, senior director of fund management at another logistics heavyweight, GLP, added at the conference that it has become common for logistics facilities to have nurseries onsite and for office fit-outs at those properties to be more attractive than even those in a central business district – all efforts to retain staff.

Helping logistics tenants to attract and retain staff is far from an easy task, given the underlying challenges. What is clear, however, is that – as is the case with other asset classes – the most tenant-minded logistics managers are also among the most forward-thinking and therefore the best able to discern and weather oncoming headwinds.

To contact the author, email evelyn.l@peimedia.com.