Link Logistics leverages proprietary data insights at scale to guide decision making, anticipate market demand and optimize investments across our portfolio. Leading that effort is Matthew Rand, managing director of the firm’s Research & Analytics department, which develops state-of-the-art solutions to support broader business objectives. Here, Rand discusses how his team’s unique work differentiates Link Logistics from competitors.
You have quite an interesting background. Can you describe your career journey prior to joining Link Logistics and how your background informs your work?
I’ve spent most of my career as an investor in the public markets, where I’ve had access to sophisticated analytical tools. The real estate world, by contrast, has historically been much more hands-on and intuitive. But over the last few years, there’s been an exponential change in how much real estate data is available. I joined Link Logistics because I saw a once-in-a-generation opportunity to build a platform to help us make faster and better real estate investment decisions at scale. Link Logistics and our parent company Blackstone are in the fortunate position of having both scale and a data-driven culture. I think you need both of those factors to be in place if you want to capitalize on analytics like we are.
Before Link Logistics, I spent a decade-and-a-half investing in and analyzing REITs. During that time, I had the opportunity to get to know a number of exceptional stock market investors and real estate management teams and see their varied approaches to capital allocation. At the same time, I was developing my own methods for allocating capital across real estate geographies and property types. This included learning to code, so that I could keep track of larger and larger data sets and use them to drive REIT portfolio analysis.
Prior to that, I started my career as a journalist. The questions you learn to ask as a journalist stay with you: Who else should I talk to? What threads hold these data points and anecdotes together? I did once track down a grave robber. Investigative thought processes drive my approach to research problems.
What is the role of Research & Analytics in driving success for a firm like Link Logistics?
Our Research & Analytics team is composed of talented data scientists, mathematicians and researchers who collaborate to analyze markets, track supply chain and logistics trends, and forecast warehouse supply and demand. Their work impresses me daily. Together, we help the firm predict what’s coming so that we can make better decisions.
If you’re buying a warehouse, you probably want to know what the leasing rate would be for that building. But you should also want to know: Will my customer want to stay in five years? Who else might want this building? How might supply chain changes affect demand for this location?
These questions might sound simple, but they lead to even more questions. We work to break them into pieces that we can answer, and then we monitor if, when and why those answers change.
We rely heavily on data science to structure our analyses. Data science lets us take micro-level data and scale it to see broader patterns. It helps us find and answer questions we wouldn’t have known to ask in the first place. We also use traditional financial analysis and spend a lot of time talking with industry participants to understand what all those rows and columns of numbers actually mean.
Can you give insight into one of the more exciting projects you have overseen at Link Logistics?
The project I am most proud of is our AI tool for predicting leasing rates. Our goal is to be able to estimate what the market rate would be for any property, including properties we don’t own. We built a model that has access to billions of data points, including hundreds of thousands of lease comps. For each lease comp, the model sees the lease’s location, which brings in spatial attributes. It sees the lease’s building, which brings in physical attributes. It learns about the economics of time and space by training on these in concert.
We’ve been using the model to inform quarterly budgeting at Link Logistics since late 2021, and it’s cut budget error in half. Our leasing teams and market officers have the benefit of our model predictions, and they also point out areas for improvement, which provides calibration. The real value of the AI tool is for our firm to be able to see the market clearly at scale and anticipate changes that will help us keep our portfolio relevant to our customers for the long term.
What key industrial real estate and supply chain trends are you and your team observing?
Decades from now, historians will talk about the dramatic changes to the U.S. economy driven by the Inflation Reduction Act, which set aside hundreds of billions of dollars for green energy transition projects. We’ve tracked more than 450 million square feet of direct manufacturing projects for electric vehicles, batteries, solar and semiconductors, mainly across the Sun Belt region, with some in Mexico and the Midwest as well. These projects will spur warehouse demand as supplier networks form around them. Moreover, smaller Sun Belt metros won’t be able to fill new jobs at this scale without population growth.
On the distribution side of the business, we’ve seen retailers prioritize speed more than ever before. Large e-commerce marketplaces have demonstrated that faster delivery converts more sales. Brick-and-mortar retailers are replenishing stores in days rather than weeks. This is a frequent topic of conversation with our supply chain council, which consists of experienced supply chain executives who meet with us quarterly to discuss various thematic topics.
We are also seeing large retailers shift toward a more regional network structure. Instead of having inventory sit centrally in massive distribution centers before filtering out to local last-mile sites, companies will keep the same inventory in multiple regions. Each region, then, has a network of distribution and fulfillment sites leading to the last mile, driving an increase in smaller warehouses.
What is your vision for Link Logistics’ future from a Research & Analytics perspective?
The edge we have through the scale of our portfolio and customer base is hard to replicate. Looking ahead, I believe we will really move the needle on the capital allocation side. The Research & Analytics group is building tools that will drive better and faster investment decisions. As the market evolves, my vision is that we will always be a couple steps ahead of our competitors. Certain conditions will call for us to invest at scale, while others will require a tactical approach. Our data and insights should position Link Logistics to make those decisions accurately and with conviction.