We Heart Sheds: Canadian QuadReal Ups Urban Logistics Play By $3B
Vancouver-based investment manager QuadReal is to pump another $3.4B into its European urban logistics venture with Valor.
The move, which follows €1.1B initial funding in November 2020, means a rapid acceleration as investors continue to feast on surging demand from e-commerce businesses.
The new buys will be in the UK, France and Germany, with a focus on last-mile logistics.
The additional investment is timely. In the 14 months since the launch of the QuadReal/Valor joint venture the duo have spent the majority of the funds committed, completing 22 investments totalling €750M gross asset value. The portfolio amounts to 2.5M SF across 13 investments in London, six in Paris, two in Berlin and a single acquisition in Birmingham. QuadReal provides the money, and Valor, which has amassed a €2.5B urban logistics portfolio since 2016, the know-how.
Valor Real Estate Partners head of investments Cane Napolitano will be speaking on the effect of e-commerce on logistics floorspace demand at the Bisnow Industrial & Logistics Transformation event on 3 March.
According to Knight Frank, UK e-commerce sales levels 3% above previous expectations by 2025 will generate another £37B worth of online sales. This in turn will drive demand for a further 12M SF of last-mile urban logistics space by 2025.
The revised projection follows increasingly confident forecasts that e-commerce sales will amount to 30% of all retail by 2025, rather than the 27% predicted earlier last year.
The firm’s analysis of hub-and-spoke networks servicing online retail found that 23.5% of space is allocated to 'spoke' facilities that are servicing last-mile deliveries, and demand for these facilities is expected to grow as online shoppers demand faster delivery times, requiring logistics operators to hold stock closer to consumers.
Vacancy rates for potential last-mile logistics units are low across the UK. The vacancy rate for units under 100K SF in London is 3.1% and in Manchester and Birmingham is less than 1%.
