Online push drives investors to logistics

The demand for more efficient distribution is attracting real estate debt investors to the logistics and industrial sector.

Real estate debt investors are increasingly attracted to the logistics and industrial sector as the move from offline to online and the required shift towards faster and more efficient distribution creates opportunity.

“Industrial is the sector that’s performed very well in the last 12 to 18 months, with increasing capital value and growing occupier demand for the underlying real estate,” said Martin Wheeler, co-founder and co-head of real estate UK at London-based fund manager ICG-Longbow.

“Both warehouse and light manufacturing are performing well and with high capital values relative to history,” he added.

Added Dale Lattanzio, managing partner of fellow London-based fund manager DRC Capital: “The logistics market, particularly in the UK, has been pretty robust recently, being slightly undersupplied and with a few sponsors targeting that as interesting to develop.

“We find that interesting to the extent that they own the sites – it’s fairly straightforward to build with a supply-demand situation that you can readily see in the market is favourable. We certainly see that trend emerging.”

The same is also true in the US. Paige Hood, chief investment officer at PGIM Real Estate Finance in Atlanta, Georgia, said: “Logistics is maybe the top property type in that the e-commerce phenomenon is really driving demand, and we see a lot of positive fundamentals.

“It is just a challenge to find enough industrial opportunities to lend on – we would like to do more if we could.”

This is part of a longer feature in the July/August issue of PDI which explores dynamics within logistics/industrial as well as the retail, office and residential sectors.