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As we navigate the complex landscape of trade uncertainty, I'd like to gauge your perspective on the leasing market for distribution facilities. Have you noticed any shifts in tenant behavior or demand?
Actually, until about three weeks ago, all signs pointed to a surge in demand, driven by a slow 2024. However, I sense a change in tone, with some decisions being slowed down despite the underlying need. Whether this translates into actual leasing remains to be seen.
Forecasting demand has become increasingly challenging due to the uncertainty surrounding tariffs and their impact on supply chains. As companies adapt to these disruptions, they're forced to carry more inventory, which can create a short-term boost in demand for logistics facilities.
However, if tariffs persist, I expect long-term demand to soften. Interestingly, this dynamic is playing out differently across regions. In Asia, China appears to be bottoming out, with signs of stabilization, while Japan has maintained stable demand despite an influx of new supply.
In India, we're seeing a strong and growing market, driven by increasing consumption and affluence among the population. This trend bodes well for our business, which is heavily reliant on consumption patterns.
As I visit markets like Japan, I'm struck by the opportunities emerging in data centers and infrastructure. While traditional retail and warehousing may be slowing in the US, demand for data center space is growing exponentially, driven by large-scale investments from major users.
We're actively pursuing this space, leveraging our existing land positions to develop data centers. However, securing power remains a significant challenge, with many opportunities still in the works. We're also exploring off-grid solutions to generate power on-site, which presents unique considerations depending on the country and region.
In terms of investment priorities, we're always on the lookout for the best opportunities globally, allocating capital to regions where we see long-term potential. Our focus is on adapting to changing market dynamics while identifying emerging trends that can drive growth in our business.
