According to a Capital Markets outlook for 2021, Colliers International predicts the industrial and logistics investment market is expected to gather further momentum in 2021 due to significant levels of infrastructure investment and the exponential growth of e-commerce.
Gavin Bishop, Head of Industrial Capital Markets at Colliers International said that atpresent, there is an estimated $26 billion in capital looking to invest in the sector.
“Given that just $3.57 billion has traded so far in 2020, it highlights the significant mismatch between supply and demand and the significant volume of unsatisfied capital looking to be placed,” Gavin said.
“As a result of this, we expect that additional assets will be brought to market in 2021 as groups look to capitalise on the continued strength of the industrial and logistics market.”
Colliers International released its Capital Markets outlook for 2021 last week and stated in its report that Industrial and logistics property has been brought to the forefront in 2020 and is now the most sought-after real estate asset class among a large share of institutions and private investors.
In the nine months to Q3 2020, $3.57 billion ($10 million +) has traded within the sector and compares to $3.38 billion at the same point in 2019.
According to findings in the report, unlike previous years where a large share of investment volumes were derived from secondary grade assets, the bulk of assets to trade in 2020 have stemmed from prime offerings.
“To illustrate, the average deal size so far in 2020 has been $67.4 million, well above the $30.7 million average recorded in 2019 and the five-year average of $33.0 million,” the report findings stated.
Colliers International expect economic conditions to improve in Q4 2020 and into 2021 which will further support spending patterns and industrial occupancy demand.
“With fewer assets being brought to the market compared to the past five years, investment in alternative subsectors including cold storage distribution centres and data centres will become more prevalent. Previously these niches of the market were often shunned by investors as they are highly specialised, however, institutions have come to better understand the fundamentals driving each sector.”