In the fourth instalment of a series of reports about COVID-19 and the implications for logistics real estate, Prologis Research looked at customer resilience amid high economic volatility and concluded that diversity of the company client base is a key factor in insulating the portfolio in turbulent market conditions.
The report highlights that March US retail sales by category, when weighted by logistics real estate industries, outperformed by 730 basis points, declining month-on-month by -1.4% versus -8.7% for total retail sales. Sales data per customer category shows that 60% of logistics retail customers experienced growth as of March 31, 2020, while 40% saw revenues decline. March retail sales for Europe are not available yet, however, Prologis Research anticipates similar trends in Europe.
The report identifies at-risk segments where new behaviours have created significant challenges in some industries. In total, identifiable direct logistics real estate exposure to the most hard-hit industries is small, at 3-4% of the customer base (auto sales, travel/tourism/conventions/entertainment, restaurants, department stores, aerospace/oil and gas).
Prologis Research has divided the COVID-19 impact into three phases: the Stay-at-Home Economy, the Recovery, and the New Normal. In the current, the focus is on the first two phases and these are connected with key trends that could lead to either increased or decreased logistics real estate depending on customer industry.
Sign up today for the latest news