Corona Virus & Canadian Warehousing Logistics

by Michael Kotendzhi | Logistics

What does Corona Virus have to do with Canadian #Warehousing Logistics?

The coronavirus has put a blip on the Canadian economy, reducing the chances of an interesting rate hike.

Industrial real estate capitalization rates are driven by the interest rates lenders are willing to lend at.

When interest rates are lower then industrial prices generally go up because investors or users are able to leverage more funds to purchase property and see better leveraged returns, similar to the housing market.

As rates go high the reverse generally happens in that prices decrease.

What does this mean for #3pl #warehousing in Canada?

The industrial lease rates in key markets of a Canada have increased rapidly over the past few years. Leaving less room for further rapid increases in the near future. Rents 3 years ago that were $7 in Vancouver are now $12, over the next 3 years predictions are rents are to continue to increase, but not at such a rapid rate.

‚ÄčAs long as rates are at current market value, warehousing storage rates shouldn’t see an out of the ordinary increase in the near future as the bank of Canada is likely not to increase nor decrease interest rates.

Michael Kotendzhi is President of Operations & Transportation and a partner at 18 Wheels. Michael has over 15 years of experience and is equipped with a degree in Logistics from the University of British Columbia Sauder School of Business. As well as a background in logistics from XPO Logistics (formally Kelron Logistics), North America's largest contract warehousing provider.

Michael's experience includes supply chain management, reverse logistics, & domestic transportation. He has developed 18 Wheels' trucking solutions, effectively utilizing the sister company's vehicle fleet and building a transportation supply-chain network across North America.