JLL: The future of global logistics real estate

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With e-commerce fulfillment centers popping up on every corner – likely even in your neighborhood – it’s no surprise that the demand for warehouse space is strong and growing stronger.

According to JLL’s The Future of Global Logistics Real Estate report, released July 21, 74% of survey respondents expect that demand for logistics space (warehousing and supply chain facilities) will continue over the next three years, even when compared with recent elevated levels.

What is needed to unlock further expansion and allow seamless, just-in-time deliveries to continue? JLL’s research highlights two key pressures that need to be addressed – limited land supply and sustainable solutions – and points to the major role technology will play in transforming building design and supply chains.

In JLL’s survey, conducted in April 2021, 720 logistics experts in 43 countries and territories weighed in on a range of issues that could affect future occupier demand in the logistics sector:

71% of respondents anticipate demand in the e-commerce sector to increase significantly

E-commerce had highest year-on-year growth take-up by any occupier group globally: 16% of 2020 total logistics and industrial leasing in the United States, 22% across Europe and 33% in China.

Strong growth for warehouse facilities is forecasted from express and parcel delivery, third-party logistics, health care and life sciences, construction and materials

Pressures to be addressed for future growth

A limited supply of entitled land for logistics space, with sub-3% vacancies in cities including Toronto, New York, Los Angeles, Milan, Tokyo and Hong Kong. In Germany, China, the Netherlands and Australia, 65% of respondents deemed this as biggest constraint on occupier demand.

Sustainable solutions must be sought, beyond only those with highest cost savings

Improving energy efficiency is the highest global priority, 73% say.

Europe shows the direction of travel, with 40% saying some occupiers are already taking “significant action” toward sustainability. In Asia Pacific, 47% say “enhancing green/renewable energy generation and use” is high priority. The Americas lag, though, possibly due to a lack of government incentives and regional marginally more inclined to rate human-centric building design as high priority.