The coronavirus pandemic has highlighted fragilities within certain corners of the real estate market, none more so than retail. Yet while the closure of stores on the high street, shopping centres and retail parks during lockdown has heaped further pressure on retail landlords, it looks set to further accelerate demand for industrial and logistics assets.
While the sector did not emerge unscathed from the second-quarter decline in real estate investment activity, investors ploughed a record level of capital into acquiring assets over the first six months of the year. Industrial investment accounted for a record 20 per cent of all global investment volumes in the first half of 2020, according to analysis of Real Capital Analytics data by Savills (SVS), making it the only sector, alongside residential, to record growth during that period.
The sector is attracting large-scale institutional investors, willing to look overseas for deals. Private equity firm Blackstone has been the biggest single player in the sector during the past 24 months, acquiring $40bn (£30.3m) of industrial and logistics assets globally, according to Real Capital Analytics. Investors have been attracted by the shift towards ecommerce, which has delivered growing rental income for landlords and increased property valuations. Forecasts from the Centre for Retail Research predict that online sales will grow by 31 per cent in Western Europe in 2020.