Source: BISNOW
A new research report from the world’s largest owner of industrial property has concluded that the much-anticipated trend of converting retail assets to last-mile logistics might actually be a bit of a damp squib.
In its report, Logistics Real Estate – Sizing the Retail Conversion Opportunity, Prologis said that retail conversions would likely account for less than 1% of new logistics stock in the U.S. between now and 2030, and that in Europe the figure could be even lower.
Prologis estimated retail-to-logistics conversions in the U.S. over the next decade will total about 8M SF per year. With total logistics stock in Prologis’ U.S. markets expected to rise to 10B SF by 2030, that means retail-to-logistics conversions would account for less than 1% of that figure.
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Holding back the trend will be economic, political, physical and legal factors. Even if retail space is converted, other uses like residential might provide a higher value.
Politically, it might not be simple to change planning consent for retail use to industrial, and physically, it might not be cost-effective to convert retail space to logistics uses.
The challenges in Europe are particularly acute.
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