GlobeSt: The Drivers Behind Logistics Warehousing’s Bright Future

Noyack Capital Partners finds mobility hubs (structured parking), cold storage warehousing, dry warehousing, and healthcare creating asymmetric risk-reward potential.

Multiple important economic trends and strong forecasts for the logistics warehousing industry make it a commercial real estate investment sector that should perform solidly today and in the coming years.

Net effective rents, absorption, consumption and the sector’s position as a hedge against inflation are making it attractive. Even the supply chain management breakdown is a potential boon to these investors.

Perhaps no analyst firm is more bullish about logistics than Noyack Capital Partners, which recently issued a report detailing how and why demand for logistics infrastructure in mobility hubs (structured parking), cold storage warehousing, dry warehousing, and healthcare creates asymmetric risk-reward potential.

Noyack assesses current market conditions to identify attractive, yield-generating assets in the near term.

“Over the long run, we believe Noyack is uniquely positioned to tap into unrealized revenue opportunities by bringing planned innovations to the logistics supply chain as the rapid adoption of ecommerce accelerates the digitization of the American economy,” said C.J. Follini, Principal, Noyack Capital Partners.

Logistics Makes Supply Chain Work

Trade and commerce are the lifeblood of the global economy, and the supply chain is its circulatory system, according to the report.

Trucking fleets and container ships, railcars and terminals—logistics is the often-overlooked infrastructure that makes it all possible. Logistics infrastructure—warehouses, distribution facilities, fulfillment centers—stands at the center of this constantly evolving ecosystem. The centrality of logistics to global commerce, and the underlying trends driving demand and change, make logistics real estate an attractive business.

“Demographic trends, the rapid pace of technological change, and COVID-19 have transformed how we live and our notion of what is possible, driving an evolution in retail and boosting demand for logistics infrastructure,” Noyack continued. “Same-day delivery and just-in-time distribution require 3x more fulfillment space than brick-and-mortar retail.

Follini said, “The current disruptions throughout global supply chains are furthering the ‘pull-forward’ of the industrial cycle in that procurement departments and buyers are doubling their product and supply purchases and storing them in domestic warehouses just to meet the holiday season’s anticipated demand.

“Pandemic-related growth of grocery e-commerce and same-day delivery alone compressed five years of the evolution of consumer behavior change into a single year. Not surprisingly, the controlled-climate area of the supply chain lacks sufficient infrastructure, so it is an area we will pay close attention to moving forward.”

After all, online order fulfillment requires more than 3x the logistics space of brick-and-mortar because:

• All inventory is stored within a warehouse.
• Online storefronts offer greater product variety due to unlimited digital “shelf space.”
• Higher volatility in sales patterns necessitates deeper inventory levels.
• Parcel shipping requires more space than shipping pallets.
• Many e-fulfillment operations include value-add activities such as assembly and reverse logistics.

Taken together, this intensity of use generates substantial incremental demand as a greater proportion of retail goods are sold online…

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