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How the Industrial Sector Is Going from Strength to Strength

The industrial and logistics sector is expected to see continued growth throughout 2017, with 60% of investors stating that this was the period likely to see the most interest over the next 12 months. We’ll explore the megatrends which are causing the industrial sector to go from strength to strength, from the restructuring of supply chains to the growth in e-commerce. 

Restructuring of Supply Chains

Urbanisation, shifting population demographics, and the increasing demand for sustainability are all driving the re-shaping of global supply chains, which in turn is leading to an increased demand for industrial space.

Accelerating changes in technology are also posing new questions for the chain of supply. The Internet of Things, “uberisation, automation, and big data are having a profound impacts upon logistics services, transforming industrial property demand in the process.

Foreign Investment

The demand for industrial property seen over the past couple of years doesn’t look likely to slow down, with the UK industrial sector growing by an average of 6% in 2016 alone. Part of the reason for this is that the European industrial sector attracts enormous interest from North American and Asian investors, particularly those from Singapore, China, and Korea.

Meanwhile, low vacancy levels and high rates of occupier demand continue to drive growth in the industrial and logistics sector. 2016 saw a 40% rise in year-on-year take-up rates (demand translated into transactions);, a trend that’s only set to continue.

E-Commerce

The massive growth in e-commerce has been a key factor in the industrial and logistics sector’s recent boom. It has caused a shift in the global supply chain, driving changes in physical distribution networks and creating the need for a whole new class of logistics and distribution centres across a range of sizes and locations. E-commerce now accounts for 22.5% of all “big box” logistics transactions in the US, and forecasts suggest that this demand is only going to get stronger.

World Trade

Increasing world trade and economic activity is a major driver behind the growth in the industrial sector. Globalisation and right-shoring are dictating new locations for industrial and logistics properties – supplier parks, logistics facilities, and campus developments are all in high demand.

Going forward, investor interest in the industrial and logistics sector is expected to remain strong.

  • For information on commercial property for sale, see JLL’s extensive industrial property collection.