Thought Leadership

The pandemic spurred a sharp rise in e-commerce, causing global supply chain vulnerabilities that underscored the need for greater resiliency. Third-party logistics (3PL) warehouse operators had to optimise supply chain operations, cut costs and utilise new technologies. 3PLs have been highly effective, now dominating demand for industrial & logistics space, impacting real estate fundamentals and warehouse building design, and leading to further industry evolution such as fourth-party logistics (4PL) and reverse logistics.

3PLs have grown globally:

• Asia-Pacific: 3PLs accounted for 30%-40% of logistics leasing activity in 2023, with marginal growth ahead. This trend is driven by cost-cutting initiatives and a desire for efficiency amid logistics’ increasing complexity.
• United States: 3PL leasing activity accounted for more than 30% of bulk transactions (over 100,000 sq. ft.) since the pandemic’s onset due to significantly higher e-commerce, requiring corresponding warehouse space. Although economic uncertainty has slowed short-term 3PL growth, the long-term outlook is strong. 4PL will drive even more modern warehouse space demand.
• Europe: 3PLs have become a larger part of logistics leasing demand, increasing by 10+ percentage points since 2019. During this time, for XXL facilities (warehouses over 50,000 sq. m. or 580,000 sq. ft.), final occupiers have increasingly preferred to control the lease themselves and contract a 3PL to operate the warehouse.

This report was originally published in https://www.cbre.com/insights/reports/the-global-outsourcing-of-warehousing

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The Asia Pacific real estate landscape is evolving, witnessing a surge in alternative sectors such as data centers and healthcare. A collaborative survey by APREA and CenterSquare Investment Management gathered insights from diverse industry leaders and professionals, revealing a notable inclination towards alternative real estate.

Investors foresee higher potential returns in these sectors over the next 1-3 years, with a strong focus on data centers, healthcare, and multi-family and student accommodations. Challenges include limited stock availability and the importance of operating platforms for optimal returns.

Japan is perceived as the current hotspot, while Indonesia and Thailand emerge as promising markets for the future. The survey emphasizes the need for ongoing education to enhance investor understanding of the evolving real estate dynamics.

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Like other commercial real estate sectors, the industrial sector globally has been buffeted by a variety of headwinds and tailwinds over the past few years. Notwithstanding these near-term fluctuations, the underlying driver for the sector in Asia Pacific is one of growth and expansion. This is being fuelled by several sources which is driving transformative change across the region and is creating a range of opportunities for occupiers, developers and investors alike. However, at the same time there are challenges that need to be overcome for the sector to reach its full potential in the region. 

Cushman & Wakefield’s latest industrial report offers a comprehensive view of these drivers and challenges impacting the logistics and industrial sector, as well as put a focus on the trends and provides strategies for key markets such as Greater China, India, and Southeast Asia to help navigate these conditions.

• Intra-APAC trade has increased 5-fold in USD dollar values since 2000, further growth is expected which will force supply chains to become more regionally focused.

• As mainland China continues to move up the value chain, new manufacturing and logistics hubs are emerging, especially across Southeast Asia and India creating opportunities across the region.

• Although labour pools are deep compared to Europe and US, talent is heavily concentrated within the region. At the same time, there is great variability in skill levels, meaning investment in capability and capacity building.

• Port throughput capacity also needs to be expanded across much of the region. India and Southeast Asian markets, cumulatively account for 19% of throughput of the world’s top 50 ports, while China accounts for 45%.

• Sectoral trends are also driving the need to redesign supply chains to incorporate greater flexibility, automation and resilience while also reducing input costs and accommodating greater sustainability initiatives.

• Occupiers of logistics and industrial space can capitalise on these opportunities by expanding into new markets and/or expanding existing facilities to meet the forecast growth in demand. However, they would be well advised to undertake rigorous supply chain mapping and location analysis to help ensure the optimum design of their manufacturing and distribution strategy.

• For investors and developers, opportunities will flow from leveraging existing relationships with tenants to aid their expansion through providing bespoke solutions. In turn, this will provide opportunities to deploy capital and expand portfolio sizes.

 

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The new PMRE Monitor 2024: An AI User Manual provides assistance and offers guidance on the path to the future. The results of the market analysis have been used to create a handbook - an AI User Manual - that prepares players of the real estate industry for the use of AI.

You will learn in detail

• which visions can be realised with AI in the real estate industry,
• how employees can be mobilised to use AI and
• how the transformation of the entire company can be managed.

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