You could invest in tech — or in warehouses
Forget your fancy office towers. The future lies in warehouses.
But not just any old dusty depot. It’s got to be big enough, smart enough and close enough to consumers. Pick right and you could beat the returns of every other kind of property this year.
Real estate investment trusts that specialize in industrial properties, such as Prologis Inc., Rexford Industrial Realty Inc. and
NAustin ing that will be the national headquarters for SHI’s small- and midsize sales organization.
“A decade ago, we opened our first corporate call center in Austin with a handful of employees,” Terreno Realty Corp., are outperforming REITs that focus on malls, residential rentals and office buildings. The three companies all returned more than 16 percent in the past year, crushing other types of real estate — and handily beating their own peers in the Bloomberg REIT Industrial/ Warehouse index, which reaped 8.3 percent.
It’s all about e-commerce. Online shopping still accounts for less than 10 percent of retail sales in the U.S., but is reconfig- uring supply chains and shaping the fortunes of warehouse landlords. Demand is especially keen in and around big cities, where online shopping has caught on fastest.
Those are the same places — New York, Boston, Chicago, San Francisco, Los Angeles — where land parcels big enough for the latest warehouses and loading docks are scarcest, and rents are highest.
Online retailers require about three times the warehouse space of traditional brick-and-mortar stores, and more-sophisticated logistical services.
“E-commerce has taken a business that was already pretty solid and turbocharged it,” Prologis Chief Executive Officer Hamid Moghadam said. Among other differences, he said, “in a regular warehouse that supplies a retail store, you are dealing with pallets of goods that are moved around. In the case of e-commerce, there is a lot of packing and handling.”