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Logistics and industrial sector to grow beyond 2021

Logistics and industrial sector can boost a country’s competitiveness that is a vital element to job creation and economic growth

Property management and investment consultancy firms agree in unison that the logistics and industrial sector will grow beyond 2021 driven by recovery in both local and global demand in e-commerce, domestic manufacturing and the export sectors.

Joey Bondoc, associate director of Colliers Philippines said developers will be proactive in landbanking  that can be developed into industrial  parks and in refurbishing assets to  meet the demand for modern warehouses and cold-storage  facilities. “We attribute the surge in  demand to a continuously thriving e-commerce sector and ramped up  Covid vaccination efforts across the country,” Bondoc said in an online forum on the company’s 2021 second quarter results.

“Moreover,  Colliers encourages developers to consider divesting industrial assets into their respective real-estate investment trust [REIT] vehicles; expand cold-storage assets; modernize warehouses; monitor the demand for built-to-suit,” Bondoc added.



In their recent online briefing, JLL Philippines pointed out that the industrial and logistics sector will deliver a stellar sector in the property sector.

Janlo de los Reyes, JLL Philippines’s head of research and consultancy told members that the logistics and industrial sector remains a bright spot in the real-estate market, outperforming  other asset classes, driven by increasing demand and stable rental rates.

“The volume of logistics and industrial transactions grew by 47 percent from Q4 2020, and we see about 100,000 sq m that may be transacted before the end of 2021,” de los Reyes.

De los Reyes noted e-commerce will be a major driver as it continues to be the consumer platform of choice for many Filipinos. According to JLL, Philippines’s urban logistics demand continues to grow, with an average inquiry size of 12,700 sq m from third-party logistics firms, and an average of 1,800 sq m from e-commerce players.

Colliers Philippines also agreed that e-commerce companies will be the main demand drivers for warehouse space. Moreover, the firm also expects  an increase in demand for cold-storage facilities in the next 12 months as the government accelerates its Covid inoculation program.

Claro Cordero Jr., Cushman and Wakefield head of research, consulting and advisory services pointed out that the unprecedented growth of e-commerce has given a lot of opportunities to the various real-estate subsectors, especially retail and hospitality subsectors. He added several shopping mall operators and developers have implemented online ordering, payment, and delivery systems­—allowing continued patronage and support for their respective tenants, especially during stricter community quarantine measures. “Hospitality developments are increasingly looking at ways to use technology to create safe leisure spaces and vacation spots,” he said.

Bondoc pointed out there was a slight increase  in land lease in H1 2021 as e-commerce companies drove the  demand for warehouses. “We expect warehouse lease rates to continue growing at a faster pace in the next  12 months with the increased take-up from fast moving consumer goods [FMCG] and e-commerce firms,” he explained.

Although Covid-19 had a negative impact on the global supply chain and the logistics industry, the Lobien Realty Group (LRG) remains optimistic  in the Philippines’s logistics and warehousing market.

“While the pandemic has altered short-term growth forecasts for the Philippines’s economy and industries, LRG assumes that midterm forecasts will remain unchanged once the Covid-19 pandemic is contained,” LRG CEO Sheila Lobien said.

“Logistics is a driver of countries’ and firms’ competitiveness which is fundamental to job creation and economic growth. Efficient logistics connects firms to domestic and international markets; it affects the competence of the manufacturing global value chains, and competitiveness of a country’s economy within these value chains,” she said.

Meanwhile, Bondoc urged  developers to   contemplate in broadening  their assets to include cold-chain facilities or  refurbish existing supply to include specialized cold-storage features such as pre-installed chillers, increased floor load capacity, and higher ceiling heights.



To capture more opportunities in the industrial sector, Bondoc said developers need to  refurbish their existing warehouse facilities to meet the demands of tenants. He added logistics players must improve the specifications of their properties through advanced-technology features such as facility automation, artificial intelligence (AI) systems, and cloud-managed IT solutions.

Bondoc said companies must also expand last mile delivery segments in fringe areas. To reach more consumers and increase the  efficiency of delivery services, he said e-commerce and third-party logistics  (3PLs) firms must consider expanding their warehouses and delivery hubs in areas outside of Metro Manila such as Cavite, Laguna, Batangas, Bulacan, and Pampanga.

“While we see improvements in the office and logistics sectors, JLL Philippines maintains cautious optimism for the second half of 2021 given the rise of variants and upcoming policies that may impact the movement of the market,” said de los Reyes.


Article and Photo originally posted by Business Mirror last September 21, 2021 and written by Rizal Raoul Reyes.

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