Savills – Logistics, 3Q 2023

The report provides an overview of the current and future outlook for the logistics sector. It mentions that central banks are signaling that interest rates will remain elevated, causing global bond yields to rise. However, historical trends suggest that rates may be cut again in the near future. The IMF predicts a soft landing for the global economy, with households, corporations, and the financial system in good financial health. However, there are vulnerabilities such as the property market in China and conflicts in Ukraine and the Middle East. This period of uncertainty makes it difficult for investors to make long-term decisions. In terms of demand, global manufacturing has been in recession, retail sales are struggling, and global trade volumes are declining, impacting the logistics market. Leasing activity is down in the US and Europe, and Japan is struggling to absorb new supply. However, when compared to 2019, the sector is still relatively stable. Challenges include an excess supply and softer demand on the occupational side, and high borrowing costs on the capital markets side. Overall, the market is experiencing a normalizing phase supported by long-term structural tailwinds.