The Real Deal New York

Here’s why industrial REITs are outperforming all others

As online shopping grows, demand will increase for distribution centers to process and fill orders.
April 15, 2018 01:12PM

Pantos Logistics Warehouse. (Credit from back: Romlogistics, Pixabay)

Thanks to e-retailers like Amazon, industrial REITs are on the upswing.

Though online shopping still only counts for under 10 percent of retail sales, the potential is already transforming supply chains, which starts with warehouses, according to Bloomberg.

REITs like Prologis, Rexford Industrial Realty and Terreno Realty are doing notably well with returns over 16 percent over the past 12 months, allowing them to surpass both other industrial REITs, which had about 8 percent returns, and all other types of REITs from retail to residential to offices.

Why? Online retailers need about triple the space along with more intricate logistical servicing, and, on top of that, the demand for delivery services are highest in dense cities where land for big facilities is scare, Bloomberg reports. As a result, rents are climbing, nearly guaranteeing a win for industrial investors.

In New York earlier this year, warehouse rents were already approaching record highs. That came on the heels of Amazon’s plans, filed last year, for its new 2-million-square-foot Staten Island warehouse, which qualified it as 2017’s largest new project in the city. [Bloomberg]Erin Hudson