{"id":1004429365,"date":"2020-04-30T13:55:31","date_gmt":"2020-04-30T21:55:31","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004429365"},"modified":"2020-05-05T11:07:46","modified_gmt":"2020-05-05T19:07:46","slug":"prologis-index-points-to-elevated-uncertainty-for-logistics","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/prologis-index-points-to-elevated-uncertainty-for-logistics\/","title":{"rendered":"Prologis Index Points to ‘Elevated Uncertainty’ for Logistics"},"content":{"rendered":"
\"\"<\/a>

Image via Pixabay.com<\/em><\/p><\/div>\n

The once-unflappable logistics sector could be in for \u201celevated uncertainty<\/em>\u201d for the rest of this year, according to a recent quarterly report from Prologis<\/a>.<\/p>\n

\n

READ ALSO<\/strong>: CMBS Late Payments Starting to Mushroom<\/a><\/p>\n

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After more than a year of \u201cconsistently strong readings above 58,\u201d<\/i> the company\u2019s proprietary Industrial Business Indicator, which is based on a survey of customer sentiment, fell in March to 41.7. Although Prologis noted that an IBI number below 50 indicates a contraction in demand, the company stated that the figure would have to remain under 50 \u201cfor several months to more clearly signal a recessionary environment.\u201d<\/i><\/p>\n

The report advises that demand and new development could both be limited, with rental growth flat, at least until \u201chealth and economic uncertainty subsides\u2014likely in 2021<\/em>.\u201d Until the pandemic became a factor, operating fundamentals were strong<\/a>, with market vacancy in the first quarter near an all-time low of 4.7 percent.<\/p>\n

Now however, Prologis is lowering its projection for net absorption from 250 million square feet to 100 million square feet, despite first-quarter demand of more than 50 million square feet. Similarly, the estimate of anticipated 2020 completions fell from 275 million square feet to 225 million square feet.<\/p>\n

\u201cCaution is warranted based on an increase in rent relief requests, and we anticipate that some longer lease-up times and potential defaults will likewise contribute to vacancy<\/em>,\u201d the report warned. Unsurprisingly, leasing activity is up in a few customer sectors, such as e-commerce, food and beverage, and 3PL. Other parts of the logistics customer base, including nonessential retail, restaurants, travel and tourism, entertainment and auto are suffering.<\/p>\n

Though the latter segments total only a minority of the customer base, the authors noted that \u201cthey have contributed to a rise in rent relief requests and may offset some of the demand surge<\/em>\u201d coming from the customer industries that are doing well.<\/p>\n

Still investing\u2014for now<\/h2>\n

While virus-related business interruptions led to a rough end to the first quarter, investment activity for industrial had been strong. In early February, BKM Capital Partners acquired<\/a> a nearly 2.7-million-square-foot portfolio of 11 industrial assets in Arizona, California and Portland for $425.4 million. Later that month, WPT agreed to buy<\/a> a 26-property logistics portfolio from Pure Industrial Real Estate Trust for $730 million. The assets total about 9 million square feet across eight states. And in early March, Venture One sold a 28-building industrial portfolio<\/a> in metro Chicago to Taurus Investment Holdings  for $153.5 million. Venture One will continue to manage the properties.<\/p>\n","protected":false},"excerpt":{"rendered":"

Nationally, the COVID-19 pandemic has brought more activity to some parts of the sector while slashing activity in others, according to a new survey by industrial real estate powerhouse Prologis. <\/p>\n","protected":false},"author":882,"featured_media":1004400215,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21808,21748,45527,23891,21742],"tags":[33648,48950,32914,32956,33806,36483],"class_list":["post-1004429365","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-featured","category-industrial","category-keyword-optimized","category-national","category-latest","tag-bkm-capital-partners","tag-coronavirus","tag-e-commerce","tag-prologis","tag-pure-industrial-real-estate-trust","tag-wpt-industrial"],"acf":[],"yoast_head":"\nPrologis Index Points to 'Elevated Uncertainty' for Logistics - 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