GLP on Thursday reported record-high leasing and development activity for its logistics business in 2020 as the e-commerce trend kicked into high gear during the COVID-19 crisis.
The world’s second-largest industrial real estate developer said its logistics business signed more than 22.7 million square metres (244 million square feet) of new and renewal lease agreements last year, up 57 percent from 2019. The segment also launched $5.3 billion or 5.6 million square metres of new development projects in 2020, up 75 percent year-on-year.
E-commerce now represents about 40 percent of GLP’s global portfolio, compared with 20-25 percent five years ago.
“The pandemic has accelerated the shift towards e-commerce and digital solutions by at least two to three years and we expect these changes to have lasting effects even as the world economy begins to recover,” GLP said in a release. “This new landscape demands not just increased warehouse space but also the right technology, data and people to create efficiencies in the broader supply chain.”
East Asian Predominance
China and Japan together accounted for nearly 90 percent of GLP’s logistics leasing activity and 80 percent of new development value in 2020.
GLP signed 18.7 million square metres of leases in China last year, up 53 percent. Against a backdrop of increased consumer demand for online shopping, GLP’s logistics team signed leases with six of the largest e-commerce players for 370,000 square metres of space in the final months of 2020.
New development projects in China totalled $1.8 billion in value across 25 markets, including breaking ground for a 130,000 square metre intelligent distribution centre for sporting goods giant Adidas in the latest phase of Suzhou GLP Logistics Park. The mainland was also a centre for fund-raising for the company, which reached a final close on its GLP China Income Fund I at $2.1 billion in April of last year.
In Japan, GLP ended the year having signed fresh or renewed deals for 1.6 million square metres of logistics space, up 60 percent compared to 2019 and the highest level the company had ever recorded in the country. With its development programme ranking as Japan’s largest, GLP launched over $2.4 billion worth of new developments, primarily in Greater Tokyo and Greater Osaka.
The Singapore-based firm continued to grow in India as well, with its IndoSpace strategic joint venture signing lease agreements for 5.6 million square feet of lease agreements, up 36 percent from 2019. E-commerce contributed the most growth, making up 35 percent of the leases signed in 2020, up from 6 percent the previous year.
The group also highlighted its strong performance in Europe, where leasing activity grew by 69 percent with 1 million square metres of agreements signed in 2020. GLP recorded its busiest year ever of development on the continent, with $813 million of new developments started, more than doubling the 2019 figure.
Year of the Shed
GLP’s banner year chimes with the preliminary findings of property information provider Real Capital Analytics, which this week reported that logistics investment volume in Asia Pacific reached an all-time high of $13.5 billion in 2020, narrowly surpassing 2018 and 2019 levels and nearly doubling the amount traded in 2017.
That record volume came as four of the region’s markets — Japan, China, South Korea and Australia — ranked among the 10 biggest logistics markets globally in terms of logistics deals in 2020, according to Singapore-based RCA analyst Benjamin Chow.
Collectively, the four markets accounted for 96 percent of all logistics deal volume in APAC last year, led by Japan with $5.3 billion and China with $3 billion, RCA said.