Consumers won’t turn back from e-commerce now – so what do institutional investors need to know about the logistics property market?

The influence of e-commerce on the daily life of many Americans became clear to me when my 92-year-old mother was able to identify what grocery items arrived at her home by the logo on the shipping box. Right now, I am doing the ordering, or ‘clicks’ as she calls it, for her, but if voice recognition technologies continue to improve, maybe that will change. The accelerating trend of e-commerce has made me wonder if the widely publicised e-commerce demands for industrial space will continue post-pandemic. What should the well-informed investor in US logistics properties be considering?

US industrial investment activity is well below 2019 levels, yet prices have posted 7% growth from a year earlier, according to Real Capital Analytics. While in the second quarter US industrial leasing initially slowed, e-commerce has been the primary demand driver to increase leasing volumes as the year has progressed. Amazon has reported its goal is to expand US warehouse square footage in 2020 by 50%, and year-to-date over half of all industrial leasing activity resulted from e-commerce and third-party logistics firms.