PROMES Real Estate
How can logistics real estate market take advantage of e-commerce retail sales growth trend? ( Part Two )
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Challenge 1: Meeting different customer needs
First of all, as a third-party logistics warehousing real estate, one of the major challenges is to meet the different needs of their customers. If the assets held by the owner are large-scale logistics real estate, they may face the situation that customers from different industries have different kinds of products to be stored and delivered. Under this circumstance, owners and investors with large warehouses can divide the large warehouse space into multiple small units to serve multiple customers. At the same time, the equipment in the warehouse can be customized to meet the needs of specific industries.
For example, ALP Logistics in Taiwan is committed to building the highest-standard logistics center in Taiwan. Its ALP Logistics Park has set up 7 special warehouses for wine, e-commerce, home appliances, cold chain, beauty, medicine, shoes and clothing sectors. Among them, the cold chain warehouse is equipped with a low temperature environment of minus 30 degrees Celsius, so that customers can obtain the needed space without additional large-scale investment. Moreover, logistics operators can plan and adjust automation equipment, transportation, and logistics services at their discretion. Providing customized and flexible services to individual industries can meet specific customer needs and create better asset value.
If the property held by the owner is a smaller-scale logistics real estate, a more comprehensive product positioning plan is bound to be made to predict the needs of potential tenants. For example, it is possible to infer potential real estate customers from their needs for logistics equipment through the consumption trends in which the asset is located and the common types of goods near the importing hub (such as port, airport, etc.), and then customize the facilities suitable for the industry. For example, in an area with a relatively young population structure, young women (according to Pinduoduo’s report in 2020), one of the main target consumer segment, frequently purchase cosmetics and clothing products. Thus, real estate owners and investors can target brands from these industries as potential tenants. In this way, they can meet the needs of potential customers and be more favored by the specific retailers.
Challenge 2: Logistics transportation carbon emissions affect the environment
According to the "2022 Climate Change Performance Indicators" ranking, Taiwan ranks 60th, the fifth lowest in the world, with a very low score in the "Greenhouse Gas Emissions" section. According to ICLEI statistics in 2021, "goods delivery transportation" accounts for 40% of the annual urban greenhouse gas emissions. Therefore, the establishment of a low-pollution logistics system will help alleviate the problem of carbon emissions and increase the overall value of real estate.
Government officials in Taoyuan City has added the "ecological logistics" section to its urban development guidelines, aiming to combine the concept of sustainable development with Taoyuan's logistics industry, which has an annual output value of over 200 billion yuan. For example, the "Low-Carbon Logistics Transfer Station" in Taoyuan is set up by a project team comprised of the government, the logistics industry, and local retail brands. The facility allows the logistics industry to unload the goods at the transfer station, and then use low-carbon vehicles such as electric scooters to deliver the goods to family and business. The Taoyuan City Government has set up an ecological logistics project office to discuss the feasibility of ecological logistics with various business operators and has been surveying residents' opinions through questionnaire. Therefore, owners of large-scale logistics real estate in cities and towns can cooperate with the government and electric vehicle manufacturers to jointly practice the regional co-logistics model and demonstrate the ESG spirit under the trend of sustainable development. By doing so, they can attract brand owners and enhance retailers’ willingness to pay higher rental prices.
Challenge 3: The rising cost affects retailers’ willingness to lease logistics property
In recent years, due to the Pandemic, the cost of land, workers, and construction has continued to rise rapidly. Under such market conditions, property owners are forced to raise asset prices to reflect increasing building costs, but such high prices may deter some potential tenants. Although it is impossible for the owner to ignore the high-cost environment, it can reduce the cost of enterprise leasing by providing more comprehensive services to reduce the total operating cost for its enterprise clients.
For instance, GLP is trying to build a comprehensive logistics ecosystem and to provide enterprises with financial leasing services for cold chain equipment and vehicles. Since cold chain equipment is considered heavy asset investment, providing financial leasing services can enable retailers to reduce the cost of initial investment and accelerate the expansion of operation scale. Additionally, to avoid the cash flow problems of the industry, GLP also provides daily working capital advance payment services, allowing tenants to use funds more flexibly. Therefore, real estate owners and investors can own logistics facilities at a cheaper price and lease them to customers by investing in logistics equipment and vehicle providers, reducing the total cost of customers' investment in logistics, solving bottlenecks for retailers, and thereby creating win-win situation and better asset value.
The rapid growth of e-commerce retail sales during the Pandemic has greatly changed the competition environment for retailers and has highlighted the importance of "fast and reliable logistics" in the industry. Therefore, logistics real estate owners and investors can enhance the value of their assets through the following methods: planning the idle real estate in the metropolitan area as decentralized warehouse; adding digital systems and automated equipment to logistics centers; creating logistics space environment suitable for potential customers after sophisticated product positioning.
In response to the challenges that the logistics industry may face in the future, property owners can meet the needs of different tenants through industrial customization and product planning; reduce carbon footprint through establishment of ecological logistics infrastructures; help enterprises reduce the total cost of logistics operation through providing capital leasing services. Keeping up with consumers' fast-moving consumption trends as well as eliminating the obstacles that will be faced by the logistics industry in the future, property owners can then take advantage of e-commerce retail sales growth and create maximum value for their assets.
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# 物流地產規劃 # 不動產開發
# 不動產產品定位 # 資產價值最大化