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Why invest in Industrial & Logistics real estate?

June 7, 2022

On-demand means in demand

We live in a fast-paced, on-demand society. The rise in e-commerce and the on-demand culture of society today has meant more need for modern, well-located industrial real estate: all types of properties where goods and products are manufactured, prepared for delivery or stored.

Urbanisation has added to that demand. The need for inner-city housing has meant higher property prices that have forced tenants in previous inner-city manufacturing and distribution hubs to seek alternative, fit-for-purpose locations close to the major cities they serve. This is happening all over the world.

These trends have combined to cause an imbalance between supply and demand: more space is needed by tenants than there is available for them to rent. And to make matters worse, any new supply is taking longer than ever to be made available because of labour and material delays exacerbated by Covid-19. 

This reality means that new properties are quickly being pre-leased, and vacancy rates (the amount of space within a property that remains empty) are low across most of the world. Analysts are forecasting that low vacancy and increasing rents will continue to shape the market in 2022 and beyond.

The risk of over-supply appears to be minimal.

Investor appetite reflects these dynamics 

Institutional investors like to follow high-conviction investment themes and, according to Real Capital Analytics, more money is flowing into industrial real estate in comparison to other property sectors like office and retail.

Attracted by unconstrained growth in the sector, the world’s most established real estate investors continue to demonstrate high conviction in the sector, attracted by a combination of structural tailwinds and outsized expansion of major cities. 

In a 2019 statement, Blackstone, the largest private real estate investment manager in the world, said: “Logistics is our highest conviction global investment theme today, and we look forward to building on our existing portfolio”. 

Fast forward to today and Blackstone owns approximately 950 million square feet of industrial & logistics assets, including warehouses. On a January 2022 earnings call, Blackstone’s President and COO, Jonathan Gray, said: “In my 30-year career, I’ve never seen real estate fundamentals in the sectors where we are focused as strong as they are today.”

Now individual investors are invited as well!

Hedgehog exists to bring the barrier to entry down for individual investors to access investments in real-world assets of institutional quality, including industrial warehouses.

In order to provide access to high-quality industrial real estate, we have secured exclusive access to millions of square feet of modern warehouses for tokenization on our platform.

These industrial and logistics properties are strategically located for manufacturing and distribution purposes, within easy access of New York City.

Eligible Hedgehog investors will be offered investments in multi-tenant industrial parks occupied by a mix of international and local companies, all of whom rely on the close proximity to major urban areas for their warehouses, distribution facilities and fulfilment centres. These tokens will seek returns that blend regular rental income and capital appreciation.

One example is i.Park 84, the former IBM East Fishkill semiconductor manufacturing facility, situated on 300-acres of land with over 3 million square feet of buildings. 

Modern Warehouse for investment
  • Location - Situated at the Interstate-84 highway exit, tenancy risk is low given the ideal location for manufacturers seeking to distribute perishable food & beverage products into New York City
  • Tenants - There has been significant investment in the wider campus, with Frito Lay (owned by PepsiCo) developing a robotic distribution centre on the site and Amazon building a 600,000 square-foot fulfilment centre across the road
  • Sustainability - @i.Park84 is a centre for locally sourced and produced Hudson Valley products 

A fully-leased manufacturing building on this site will be one of the next tokens made available for eligible investors on the Hedgehog platform, offering stable cash flow and upside potential as well as exposure to a highly sought-after investment theme. 

Hedgehog is a blockchain-driven investing platform that makes fractional investments in real-world assets available to individual investors. Sign up and start investing today.

Nothing in this article constitutes financial advice or guidance. The content in this article is an opinion and is for general information purposes only. It is not intended to be financial advice. The value of your investment can go up or down so you may get back less than your initial investment.