Analyzing Freight Traffic’s Impact on Logistics Asset Pricing
Understanding how the flow of goods influences real-estate performance is increasingly relevant to investors in logistics real estate, amid raised uncertainty around global trade and tariffs. Analyzing approximately 5,000 logistics-property transactions across Germany, the Netherlands and U.K., we explored whether freight-handling volume has correlated with transaction pricing.1
Positive relationships between freight volume and pricing are more apparent in particular markets. Higher freight volumes in the Netherlands were linked to stronger transaction prices; this relationship was even more pronounced in the U.K. These country-level relationships can weaken at the metro level, however. Germany illustrates this divergence well: Properties exposed to over 20 million tonnes of freight volumes over three years saw a positive pricing effect, while those below that threshold did not.
Freight volume can help explain the pricing of logistics real estate, but its influence varies. National averages mask market nuance, and investors and stakeholders would be well served to use a local lens.
Each line represents a simple linear regression using freight-handling volume to explain pricing for a specific country. Different shades of the same color represent the largest metro areas within that country, with the remainder collected in a “Rest of” category. Freight-handling volume refers to the tonnes passing through freight-handling locations within a four-hour driving window of that asset, over a three-year period prior to the asset’s transaction date, weighted by drive time. Source: Kania Advisors, MSCI
The author thanks Will Robson for his contribution to this quick take.
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1 Most properties in the U.K. are in locations exposed to freight-handling volume of less than 20 million tonnes over three years, because freight moving through U.K. ports is generally traveling only to or from the U.K. In Germany and the Netherlands, by contrast, many assets are in locations exposed to higher volumes, since their ports also serve as gateways for freight to and from other European countries.
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