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Are logistics Reits overvalued?

Rising demand for warehouse space over the past year has led to rising rents – and valuations – for UK-listed logistics landlords
Are logistics Reits overvalued?
  • Logistics assets are reaching new highs in value thanks to consistently growing rents
  • Shares in warehouse landlords have benefited from positive sentiment over the past 12 months and some trade at premiums to net asset value

Real estate investors are clamouring for exposure to the logistics sector. Those seeking to capitalise on the acceleration in ecommerce and renewed focus by companies on strengthening supply chains post-pandemic and Brexit are willing to pay higher prices for assets. 

Cash is also being ploughed into new sites. Warehouse development is on course for a record year in 2021, with 40m square foot (sq ft) in space larger than 50,000 sq ft under construction, according to the real estate services group. That is more than double the amount completed in 2020. Yet most of the space under development is already committed as retailers and distribution companies have opted to satisfy their needs through “build-to-suit solutions”, it said. 

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