New CBRE Report Explores Dramatic Growth of Global Trade and Logistics Hubs and its Impact on Industrial Real Estate
Taipei – Over the next decade, 20 markets worldwide — including China’s Beijing, Hangzhou, Nanjing, Suzhou, and South Korea’s Busan — are set to emerge as global logistics hubs, according to a new report from CBRE. These emerging locations share a number of characteristics, including significant investments in infrastructure, new trade policies and agreements, and more advanced supply chains and technologies.
“The core of this international trade is the flow of goods through supply chains that connect raw materials, production and delivery to consumers worldwide. Infrastructure, accessibility, market size and business environment are all integral factors to ensuring efficient supply chain flow,” said Richard Barkham, Global Chief Economist, CBRE. “Logistics hubs are the main driving force behind the industrial real estate markets and are at the center of large clusters of distribution facilities.”
While global hubs will continue to best meet the needs of large companies with international supply chains that encompass the sourcing, manufacturing, distribution and sale of goods, there are numerous regional hubs — including China’s Beijing, Hangzhou, Nanjing, Suzhou, and South Korea’s Busan that are poised to become major players in the network for global trade. Although they currently serve as central processing locations for regional supply chain networks, a number of factors are shifting the dynamics of international distribution and catapulting some regional hubs into the supply chain spotlight. While each of these hubs are changing due to influences unique to each location, there are a set of especially important factors that are common across the world and play a role in the growth of logistics hubs from regional to global players.
TECHNOLOGICAL ADVANCEMENTS
In Asia, the e-commerce and e-tailing market has been particularly strong, with e-commerce upending the traditional brick-and-mortar distribution networks, forcing retailers and third-party logistics firms to adapt to an increasingly demanding consumer.
“Speed-to-market is more important than ever. The service demands brought about by e-commerce—for example, shorter delivery times to consumers—has changed the entire retail supply chain of getting goods to consumers, including regional distribution strategies. The technical ability of locations and buildings to support the ever-increasing demands for both scale and speed of output is an ever-more important determinant of market position.” said Dennis Yeo, Regional Head, Industrial & Logistics Services, CBRE Asia.
Larger trends in the global supply chain can shape the emergence of global hubs. In Asia, low-end manufacturing—such as garment and textiles production and electronics component assembly—has steadily been moving from Southern China to Western China and Southeast Asia. Southern China, encompassing the Pearl River Delta, has traditionally been the light industrial manufacturing center of the world, however, as wages continue to rise and China attempts to move up the manufacturing value chain, there has been a shift to more sophisticated heavy industry manufacturing. Elsewhere, Vietnam has been the major benefactor of the change in manufacturing mix due to its low wages, strategic location to China, improving infrastructure and business-friendly political environment, such as the relaxation of regulations on foreign direct investment.
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CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2016 revenue). The company has more than 75,000 employees (excluding affiliates), and serves real estate investors and occupiers through approximately 450 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.
