Logistics REITs: Sorry, Out Of Stock
The coronavirus pandemic has exposed the fragility of global supply chains. Demand for industrial real estate space remains insatiable as businesses scramble to invest in logistics resiliency.
Order delays and bottlenecks have worsened amid the global economic reopenings, frustrating both businesses and consumers alike. Goods-selling businesses report historically low inventory-to-sales levels.
The "hub of e-commerce" and the hottest property sector of the last half-decade, industrial REITs recorded the strongest earnings and dividend growth of any real estate sector in 2020.
The pandemic significantly accelerated the penetration rate of e-commerce, which requires three times more logistics space. While not an immediate risk, tech-driven efficiencies could eventually impair demand.
Stellar fundamentals rarely come cheap and industrial REITs are priced for perfection. Similar to the red-hot housing industry, the trends of limited supply and robust demand should persist throughout this decade.
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