Innovation to be at the forefront of logistics following COVID-19

The financial impact of COVID-19 is still unknown, but it is clear that there will be several months of operational impact throughout  global supply chains.

Colliers International’s latest report studies the impacts of COVID-19 on industrial and logistics occupiers. The paper found that COVID-19 has forced industrial occupiers to focus on supply chain management as they look to become more resilient to future events.

Innovation will come to the forefront as occupiers increasingly adopt technology within warehouses including AI, blockchain, machine learning and predictive analytics.

“Not only has COVID-19 changed the investment landscape, it has reshaped how industrial occupiers go about their business with an increased focus on supply chain management,” said Malcom Tyson, Managing Director, Industrial at Colliers International.

“Occupiers are adapting and are being proactive, with many investing in their omni-channel platforms and reverse logistics, seeking supply chain management solutions and diversifying their supplier networks.”

Colliers recently undertook two industrial occupier sentiment surveys, with the purpose to obtain real time insights into the issues impacting industrial occupiers in the current market.

“Our survey found that industrial and logistics occupiers are looking at their business and supply chains to achieve efficiencies and better respond to the impacts of COVID-19. As a result, 85% of occupiers have reviewed their supply chain network; 31% are storing more stock locally to avoid shortages into the future and 31% are requiring more warehouse storage space as a result,” said Luke Crawford, Associate Director, Research at Colliers International.

“With almost half of industrial occupiers we surveyed suggesting COVID-19 has impacted their revenue, leasing activity has slowed and a large number of occupiers who were previously in the market for new or expansionary space have since placed their decisions on hold.”

“We expect this to remain the case until the future economic environment stabilises or becomes clearer; in the short term, the $70 billion JobKeeper payment initiated by the Federal Government will provide a cushion effect to businesses within the logistics space.”

“Notwithstanding this, there has been a noticeable shift in demand towards defensive occupiers including food and beverage retailers, e-commerce groups, transport and logistics providers, data centres and cold storage occupiers. Recent trends in retail turnover supports this as consumers increasingly shift their spending habits towards non-discretionary items.”

Colliers’ anticipates that rents are expected to stagnate across most industrial markets over the next twelve months as landlords instead choose to increase incentives to secure tenants.

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