Asian Logistic Market Under-Supplied, Growing Demand
By Matt BechardThroughout his career, Jeffrey Schwartz has found opportunity in Asia. Now, as co-founder and chairman of the executive committee of Singapore-based industrial REIT Global Logistic Proeprties (GLP) he is fully committed to what he considers the fastest-growing market in the world.
“Just look at the dynamic growth in China and India, the strength of the economy in Japan despite the recent earthquake. It is a phenomenal region of the world and far outgrowing the more developed areas of North America and Europe,” Schwartz said.
Global Logistic Properties, which Schwartz co-founded in 2009 with Ming Mei, is Asia’s largest provider of modern logistics facilities. It owns, manages and leases out 208 completed properties in 123 logistics parks spread across 26 major cities in China and Japan. Schwartz said the company is positioned to take advantage of the tremendous growth in Asia.
“China has 1/12th the distribution space per capita that the U.S. does. And there is no reason for that given the growing domestic consumption and middle class there. Out of that 1/12th, 90 percent of that is totally functionally obsolete,” he said.In addition, China is transforming itself into a domestic consumption-driven economy, Schwartz said. Ninety-five percent of Global Logistic’s space is used for domestic consumption.
Schwartz was in Japan when the recent earthquake hit. He said the company first located all of its staff and then set about to assess the state of its assets.
“Of $6.3 billion of assets in Japan, we had less than $30 million of damage,” Schwartz said. He added that the company saw a spike in occupancy from 97.2 percent to 98.7 percent from customers whose buildings were damaged in the quake.
Schwartz attributed the minimal damage to building high-quality properties that have seismic stability control and seismic isolators, as well as to the quality of his team’s response.
Going forward, Schwartz envisions the biggest opportunity for growth coming from new development. In fiscal year 2011, ended March 31, 2011, the company had 14 million square feet in new starts in China alone, he said. That will increase to 16 to 17 million square feet in fiscal year 2012
.However, he said the company has done some acquisitions which will give it an even greater market-leading position in the region.
“But the bulk of our business will be development because there is such a shortage of modern, efficient, safe and seismically strong facilities,” Schwartz said.
