Technology: The Industrial Real Estate Game Changer
The impact of new technologies on global supply chains can hardly be overstated. The possibilities of mobile devices and apps seem endless and have made old business models obsolete.
Via an interactive audience poll at CBRE’s annual global Industrial and Logistics conference, ‘The Power of Three’, over 300 delegates shared their views on where innovation is leading the industrial & logistics industry and how location, specification and role of real estate may change.
The evolution of e-commerce and online retailing stands out as a major disruptive factor for the sector, encouraging technological advances. It is this, and the need for global manufacturers, retailers and third-party logistics providers to satisfy customer requirements. View accompanying client interviews
Despite a tumultuous global economic climate in 2015, prime logistics rents in global hub markets increased 2.8% year-over-year amid growing demand—driven principally by the growth of global supply chains and the expansion of consumption and production into new locations.
Capital value growth loses momentum, rent growth holds firm
The global economy emerged from a turbulent start to the year to record a period of steady growth in Q1 2016, thanks mainly to stronger growth in the Eurozone. Oxford Economics estimates that the global economy will expand by 2.2% this year.
Capital values and rents recorded further growth in Q1 2016. While capital value growth continued to outpace rent growth in the office, industrial and retail sectors, the period saw a slowdown in capital value growth across the three sectors.
The slower growth reflected the decline in investment volume recorded during Q1 2016, but there is still a considerable weight of capital in the market ready to be deployed, so the weakness is unlikely to persist for long.
Moderate economic growth with low interest rates, punctuated with bouts of pessimism and volatility—the factors that have characterized the world economy for the past few years—are likely to continue in 2016, supporting moderate growth in commercial rents and investment sales volume globally.
Over the past 35 years, global trade has increased by nearly 600%. To support this growth, logistics hubs connecting multiple transport modes have been established in virtually every country.
To more efficiently move goods worldwide, logistics operators have turned to hub-and-spoke models — similar to the systems adopted by the airlines in the 1970s.
CBRE Research has identified 30 global hubs that dominate world logistics today, which include Los Angeles, Chicago, Hong Kong, Tokyo, London and Paris.
The stage has been set for the rise of a new group of global logistics hubs in the coming decade, warranting close attention from the marketplace. CBRE Research has identified 20 such markets, including South Florida, Bajio, Busan, Suzhou, Berlin and Amsterdam.
INNOVATION DRIVES CHANGE FOR INDUSTRIAL AND LOGISTICS
• The possibilities of mobile devices and apps have made old business models obsolete.
• Increasing competitive pressures and the need to deliver first-class customer service are leading to an acute need for innovation among manufacturers, retailers and third party logistics service providers.
• The resulting changes in supply chains will have a major impact on industrial real estate.
• The need for new construction is growing for occupiers, developers and investors alike and it is vital to understand the impact of technological change on industrial and logistics property requirements.
The 2015 Global Investor Intentions Survey shows that global real estate investors remain confident and their intentions are strongly expansionary. The appetite for cross-regional investment is increasing and more investors intend to deploy capital outside their own region this year.
Despite the strong liquidity in the investment market, investors are concerned about the intense competition for assets. Pricing is identified as the biggest obstacle to making acquisitions. There continue to be worries over economic weakness but there are encouraging signs of recovery in the U.S. and sustained growth in Asia.
Tighter yields in most markets are prompting investors in EMEA and North America to place a stronger emphasis on value add and opportunistic investments for higher returns. In contrast, investors in Asia Pacific intend to increase their focus on acquiring core assets in 2015. This trend is partly due to the increased participation of long-term low risk-tolerant institutional investors both from Asia and internationally.
The survey suggests that in the coming year investors are likely to rebalance their portfolios and switch from market sectors that are perceived to be overpriced. Second tier and smaller cities are gaining popularity but London remains the preferred city. Offices are the favoured asset class whilst retail is lagging. Alternative property sectors such as student living, healthcare and retirement homes are seeing stronger interest.
Overall, the mood among investors remains upbeat and buying demand will exceed selling pressure. CBRE believes 2015 will be another strong year for the global real estate investment market, with capital flows expected to increase by 10-15%.
The purpose of this report is to assist Corporate Real Estate executives with elevating the performance of Facility Management (FM) operations. Based on recent research conducted by CBRE Global Corporate Services,this study investigates leading FM best practices in Corporate Real Estate (CRE) organizations.