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
The disruptions posed by the pandemic in the last year have illustrated the centrality of logistics infrastructure. Now more than every, consumers are aware of how essential warehouses, trucking fleets, and container ships, for example, are to everyday life ‐‐ and that makes logistics real estate an attractive business
San Francisco‐based REIT Prologis, Inc. issued a report earlier this year on the trends shaping logistics real estate demand and noted, ‘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 logistics demand.’
Follini agrees, noting that, “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.”
His point is supported by Prologis’ report on logistics real estate demand, which explains further why online order fulfillment requires more than 3x the logistics space of brick‐and‐mortar. The report cites the following as reasons for this increase in space.
Taken together, this intensity of use generates substantial incremental demand as a greater proportion of retail goods are sold online.
Prologis’ report indicates that consumer expectations have increased in a permanent way, favoring convenience, choice, reliability and immediacy. ‘Naturally, the combination of new digital options and a desire for convenience have propelled the adoption of e‐commerce,’ it read. ‘E‐commerce as a proportion of retail goods sold globally grew to nearly 20% in 2020 from about 4% in 2011.
Melinda McLaughlin, head of global research with Prologis says, “The lesson learned from the pandemic is that the just-in-time supply-chain model isn’t really built to handle these kinds of large-scale disruptions.”
As a result, merchandisers are looking to gain more control over their supply chains by leasing networks of smaller fulfillment centers in urban areas, to larger regional warehouses, NOYACK wrote.
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