E-commerce and logistics real estate investment trusts: strategies for extracting land rents

Abstract

The amount of resources channeled to the commercial real estate market has grown rapidly in recent years with the rise of financialization. In this paper we analyze the financialization of the Brazilian logistics sector, arguing that it is linked to the operation of real estate investment trusts. We seek to show that these financial players have deployed strategies to extract land rents by taking advantage of two related processes: the retail companies’ growing demand for logistic space – accelerated by the Covid-19 pandemic –; and the Brazilian investors’ demand for the so-called 'alternative' investments. We conclude that these players have particular risk and return criteria that result in highly selective investments in terms of localization, construction characteristics and selection of tenants.