The increasing need for available inventory will make logistics the hot property of the real estate market. The evolution of humanity and technological progress have changed us in many ways, our nature, our needs, our experiences, but not our instincts. The human survival instinct will always make sure we have the urge to preserve, store, hoard. Food and medicine for a pandemic or war. Backups of documents or evidence, as insurance, and even furniture for which we have no room due to a reduction in living space… Because who knows what a new day will bring.
Economic experts claim there are four main processes in our lives that affect the logistics market: downsizing, divorce, death, and a life event involving transition (house move, marriage). These changes create in us the need for storage. These processes have made the U.S. self-storage market be valued at $ 38 billion in 2018, with more than 700 million sqm of self-storage space. This is the equivalent of three times the area of Manhattan Island under a roof. Some of these events affect everyone, like the global pandemic we are experiencing these days, which has plunged the world into chaos.
The COVID-19 pandemic brought with it, images of empty shelves in the supermarkets, spread across the world’s households through social media. These images caused people to panic and hoard food and hygiene products. Even Rami Levy, who announced on prime-time TV that his logistics center is fully stocked, did not help. These days we are witnessing an acute shortage of eggs in food stores and supermarkets.
The logistics industry has experienced a quantum leap in recent years. The rise of e-commerce and the growing need to transport diverse goods to population centers, has made shipping and logistics a soaring industry, globally and also in Israel, especially recently, in light of the entry of a giant company like Amazon into the Israeli market.
Furthermore, the logistics market has opened up to many audiences who were not previously interested in it, like real estate investors who recognize in its popularity fertile ground for monetary return, as well as professionals and manufacturers or small and medium-sized companies, who find logistics center an ideal place of business, whether it is close to home, close to the customers or just more economical.
Logistics centers are currently being built not only along main traffic arteries and near airports or ports, but also near population centers in Gush Dan. Logistics centers are much more accessible for customers nowadays, providing many storage options, thanks to versatile design.
The self-storage industry, which began in the 1960s in the United States and gained momentum in the 1990s, has also evolved and improved. There are some highly sophisticated personal storage units available on the market, with the most advanced climate control and security systems. This has brought people to rely on these units to store their most valuable belongings. The installation of most of these units is cheap and simple, and the storage options and methods are flexible, immediate and fast, while unloading and loading are also very convenient.
Another reason for the rising popularity of self-storage in Israel is the decline in Israeli households who own their own home.
According to a CBS survey published in February 2019, the percentage of home ownership among households in Israel fell by close to 4% from 70.2% in 1997 to 66.5% today. Among the lowest percentile, this rate is higher – a drop of over 5% in home ownership.
The pandemic is having a profound impact on the logistics and storage industry. It has created a crisis in China, the world manufacturer. The crisis caused a long halt in the import of goods and a shortage in many industries, some of which were essential to the economy. In light of this, we have had to learn the hard way that inventory maintenance becomes critical in times of crisis. This current crisis will impact different industries, like food and medicine, and motivate business owners, entrepreneurs and investors to think differently in terms of keeping stocks available, and as close as possible to population centers. This will surely increase the demand for storage and logistics areas.