Rents for logistics facilities rose more than 15% worldwide and were up nearly 18% in North America last year, driven by high e-commerce volumes, the supply chain’s need to build more resilient inventories, and the rising cost of construction materials, according to recent data from logistics real estate giant Prologis.
The company released its Logistics Rent Index this month, which tracks trends in net effective market rental growth (which adjusts for free rent) in key logistics real estate markets in North America, Europe, Asia, and Latin America. The research tracked record rental growth for 2021 and predicts high single-digit growth this year as demand meets or outpaces supply. Among the global trends in 2021, according to the report:
- Bidding wars for space are increasing as available logistics space drops. As demand outstrips supply, vacancies are at record lows around the world.
- Record demand stems from a stronger economy and industry-specific factors, such as the rise of e-commerce. Also a factor: Retailers are boosting inventories to make sure consumers get their goods on time.
- Spiking construction costs and land prices produced record high replacement costs. Developers have had to increase rents to bring on much-needed supply.
