What is the typical internal rate of return (IRR) range for logistics?

The typical internal rate of return (IRR) range for logistics is aligned with various factors such as market demand, property type, location, and the overall economic environment. An IRR of 7-10% indicates a healthy investment in the logistics sector, reflecting the balance between risk and return in this asset class.

Logistics properties are essential to supply chains and experienced steady growth, especially with the rise of e-commerce and increased demand for distribution facilities. This prevalent IRR range suggests that investors seek reasonable returns that are commensurate with the relatively stable income produced by logistics properties, while also accounting for the risks involved.

Options that fall outside the 7-10% range, such as 10-12% or higher, may reflect a riskier investment profile or overestimations in expected returns, while 5-7% suggests a more conservative investment atmosphere, typically associated with lower-risk property types or locations.

Overall, an IRR of 7-10% serves as a benchmark for logistics investments, capturing the essential dynamics of the market and reflecting the competitive returns investment professionals expect within this specific real estate sector.