Global trade provides vital goods to consumers, supports millions of jobs worldwide and is the lifeblood of industrial real estate markets across North America, Europe and Asia Pacific.
Over the past few years, trade and geopolitical tensions, technological advancements and rising transportation costs have led companies to diversify and regionalize their supply chains. This trend has accelerated with the onset of COVID-19.
Supply chains are going through immense change at a time when consumers are purchasing goods online at a record pace. E-commerce is forcing companies to keep larger and more diverse inventories in closer proximity to end users. Inventory-control failures in the first half of 2020—when many companies could not fill orders efficiently—have vividly illustrated the urgency of having more inventory on hand to support online sales. The combination of inventory controls, consumer habits, population growth and transportation strategies will benefit growing seaports throughout the world and will increase the importance of inland ground, rail and air freight hubs in every region.
These changes are leading to massive increases in infrastructure spending and modernization of existing logistics hubs, and will put emerging industrial real estate markets in the Southeast U.S. and Mexico, Mediterranean port markets in Europe and Vietnam in Asia on the radar of both occupiers and investors.
These regions will grow but will dwarf the global trade behemoths of the Western U.S., China and the North Sea ports of Europe. While COVID-19 revealed serious flaws in traditional supply chain strategies—particularly using these three regions as the single point of sourcing and importing of goods—they will remain the major players in global trade. Just like emerging regions, the global gateway powerhouses must modernize to keep up with rapidly evolving consumer, political and technological changes that will shape trade and industrial real estate in the coming years.