Global Real Estate Outlook: Seizing on the Cyclical Uplift

A whole new world of reshoring and near-shoring

Geopolitical fragmentation is a key mega force that will shape the future world in the new investment regime of higher macro and market volatility, and the BlackRock Investment Institute has highlighted it as a key investment theme for all asset classes. A cascading of recent events, including the U.S. trade wars, the pandemic, and the Ukraine invasion, have built on each other and exacerbated volatility.

Companies globally have been adjusting to this new world by rewiring their supply chains to build greater resilience in the face of disruptive events. Localizing supply chains can shield against supply risks and help businesses adjust quickly to changes in demand and supply. The U.S. has seen an uptick in investment in manufacturing, consistent with higher-than-average job openings in manufacturing and good wage growth. In Europe, nearly two thirds of countries say they plan to restructure their supply chain in the next five years, with the most noted concern being ongoing political instability (source: Inverto).

The rewiring of supply chains will likely create more opportunities for real estate investors. For tenants, having the right industrial/logistics assets is key for an optimized and more localized supply chain. At the same time, real estate investors likely need to ensure investments are future proofed for the supply chains of tomorrow.