The logistics real estate sector could be among the best positioned to handle inventory supply and demand disruptions from the COVID-19 outbreak due to standard long-term occupancy contracts and a potential shift to more regional supply chains in the future, according to a report from Prologis released in March.
The logistics real estate sector could be among the best positioned to handle inventory supply and demand disruptions from the COVID-19 outbreak due to standard long-term occupancy contracts and a potential shift to more regional supply chains in the future, according to a report from Prologis released in March.
To date, a healthy economy led to "longer leases that buffer cash flows from short-term disruptions," according to the report. While short-term investment in warehousing might slow due to the economic impact from the outbreak, the sector has the insulation needed to recover.
Supply chain managers typically prefer to keep inventory levels low, but shortages of consumer goods such as food and cleaning supplies could lead supply chain managers to rethink optimal inventory levels and storage locations, the report found. As a result, there could be increased demand for space to handle an eventual surge in goods and build up resiliency against future shocks. (Read more)