Ivanhoé Cambridge focuses on urban logistics amid post-pandemic shifts

Ivanhoé Cambridge, the global real estate investment arm of Canadian pension fund Caisse de dépôt et placement du Québec (CDPQ), is actively pursuing emerging opportunities in Asia’s logistics sector as part of its global investment strategy.

The company's strong focus on logistics and industrial real estate is in response to global trends, particularly the rise of e-commerce, which has driven demand for distribution centres, warehouses, and other logistics facilities.

The rapid growth of e-commerce has had significant implications for last-mile delivery, prompting the C$77 billion ($57 billion) fund to take a closer look at urban logistics, according to Laurent Fischler, who leads Asia-Pacific investments.

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Laurent Fischler,
Ivanhoé Cambridge

“Demand for traditional big-box warehouses in good – outer-city – locations remains strong. At the same time, we are seeing increasing demand for less traditional, smaller spaces, in more central locations, to meet this growing demand for ‘last mile’ locations,” Fischler told AsianInvestor.

This shift has led Ivanhoé Cambridge to strategically invest in multi-storey premises in urban infill locations, which refers to the development of underused spaces along existing usage patterns. The projects cater to the critical challenge of getting products to consumers quickly and efficiently in congested city environments, commonly referred to as last-mile delivery.

EMBRACING TECH

The integration of technology is a key factor in the company's investment strategy, as the acceleration of automation and AI in logistics now requires much higher specifications, according to Fischler.

“Automation has been a trend for several years but seems to have been accelerating since COVID. Technological advances in automated picking and sorting are driving higher technical specifications for new projects, such as higher ceilings (to allow for higher racks), heavier floor loadings, and ‘super flat’ ground floor slabs,” he said.

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By investing in properties that support such advancements, Ivanhoé Cambridge aims to ensure its logistics assets are future-ready and are equipped to handle the automation technology that has become increasingly pivotal in efficient warehousing operations.

PROACTIVE MEASURES

The global pandemic brought about a sharp increase in e-commerce activity which, in turn, exposed vulnerabilities within global supply chains.

Companies have had to respond by seeking out alternative strategies for storing inventory and fulfilling logistics requirements, according to Fischler.

“If anything, supply chain disruptions, decoupling & ‘China + 1’ trends are actually creating a need for more logistics space, with companies moving away from a traditional ‘just in time’ supply chain management system to a ‘just in case’ approach, keeping higher inventories and creating some system redundancies, precisely to cope with any unforeseen disruptions,” he said.

Also read: India is in, China is out for global pension funds, SWFs

Fischler also highlighted his firm’s approach to the sector’s shift towards sustainability.

“In terms of future-proofing our assets, achieving high ESG standards is also front and centre,” he said. Efforts include introducing energy efficiency standards for new buildings, including rooftop solar, and maximising the use of renewable energy, as well as supplying “quality amenities” for tenants and their employees, according to Fischler.

NEW NORMAL

Amanda Ortiz,
CBRE

The logistics pivot towards advanced technological integration and urban-centred solutions is becoming increasingly prevalent as a new industry norm, according to a recent study by global commercial real estate investment firm CBRE.

Amanda Ortiz, CBRE director of US industrial & logistics research, noted the significant benefits to the industrial sector from the e-commerce boom, with larger and more strategically located distribution facilities closer to consumer hotspots.

“It is expected that automation and robotics will be more widely used within e-commerce facilities for picking and packing, and investments in more advanced real-time analytics to optimise layout, inventory management and fulfilment process will increase as well,” Ortiz told AsianInvestor.

“We expect this trend to continue to grow over the next five years, with automation and urban warehousing playing a larger role for this industry,” she said.