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UK Logistics: The Sector To Watch As Coronavirus Changes Real Estate

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Blackstone is not known for taking sudden impulsive decisions, so its deal to acquire the £120M Clearbell Capital UK last mile logistics portfolio yesterday, in the midst of the coronavirus pandemic, is worth noticing.

The 2M SF portfolio of 22 small and midsized near-urban logistics units will be added to Blackstone’s €8B Mileway platform. The company has been a huge investor in logistics for the past eight years, and the deal shows that it has no sign of letting up. 

Clearbell has been nurturing the portfolio since 2017, almost doubling its size in the last three years, IPE Real Assets reports.

The Blackstone move comes as evidence mounts that whatever devastation the coronavirus causes to the retail and coworking arms of the real estate sector, it could be to the advantage of warehousing.

Speaking on a trans-Atlantic conference call, Cushman & Wakefield chief economist and global head of research Kevin Thorpe told investors industrial property was not seeing the pain experienced in other sectors. The shift away from high streets to online has been accelerated by the coronavirus crisis, and much of that retail spend may remain online once the pandemic has eased.

“We still don’t have the data, but we know that coworking is sharply down, hotels are sharply down, anything that involves congregating or close contact, and I don’t find that surprising. But the industrial sector is doing well and may come out of this stronger than ever as we see a massive shift to e-commerce,” Thorpe said.

This echoes the conclusions tentatively reached by Prologis, and the pivot to urban logistics by M&G Real Estate.

Prologis said last week that resilient supply chains will ride out the coronavirus outbreak and could speed up long-term change in the logistics sector.

M&G said that despite 1M SF of industrial lettings in the Midlands in the last 18 months, it will focus its development and land acquisition efforts on London and the South East. The firm’s pivot away from Midlands big-box distribution centres reflects the higher rental growth prospects in the urban logistics sector, which is increasingly influencing the thinking of investors.

The growing interest in logistics property contrasts with the plight of the coworking sector, which has seen reports of London demand falling by as much as 90%.