In addition to the increasing need for reliable supply chains, it is predicted that there will be many reflections on the real estate sector. Among the strengthening predictions are that working-from-home habits will begin to spread even after the effects of the virus pass, and the shift from shopping malls and retailers to e-commerce will accelerate. This is not good news for the office and retail real estate market.

In logistics and industrial real estate, the situation will be slightly different. Although the decrease in demand in the short term leads to empty spaces, demand is expected to increase again with renewed production stocks. In addition, new storage area needs will emerge to ensure business continuity and service quality. 

The COVID-19 pandemic is testing supply chains with an unexpected volatility. Accordingly, it can be predicted that there will be long-term and significant changes in supply chain trends, which will increase the demand for storage areas and   logistics services. 

Increased stocking levels: Supply chain planning is designed to reduce logistics costs by keeping stock levels to a minimum. It has almost no flexibility against volatility. After COVID-19, companies will review these strategies and re-evaluate their stock levels in terms of quantity and location. This is also expected to increase the demand for storage space.

Increased E-commerce usage:  It will be a likely result that e-commerce, which grew by 16.7% worldwide in 2019, will increase the number of consumers and quantities under the influence of the Corona virus. It could accelerate the change of habits, especially in the countries most affected by the pandemic. 

Different production and storage locations: Spreading production to many different locations (Mexico, Latin America, Eastern Europe, etc.) to protect the supply chain against similar future risks, and being close to different supply and consumer sources, will be a strategy that many manufacturers will evaluate.

In addition, manufacturers who keep their stock levels at zero by producing with JUST-IN-TIME processes, especially in the automotive sector, were seriously affected by the Corona virus pandemic. As an alternative, they can switch to a stock-keeping model at a level that will meet supply chain disruptions and increases in demand, which will increase storage demand.

However, in any case, industrial and logistics real estate will receive more intense demand than other sectors and will continue to attract investor interest more. Marketplaces and platforms that also use technology in this field will continue to gain value in particular.

Source: Prologis research