‘The reality is that if you invest in logistics in a core market and in a good location, you cannot really make a mistake,’ said Christian Bischoff (pictured, far right), CEO of Log4Real. ‘We have identified 24 main markets in Europe where demand is high. The fuel for our plans is e-commerce and the obsolescence of old warehouses and industrial facilities.’

Technology and innovation are playing an increasingly important role in logistics. On the retail and e-commerce side, that means increased automation, robotics, digitisation and experimenting with drones. In industrial warehouses, technology goes hand in hand with sustainability. Tenants are demanding modern production facilities that are silent, insulated and environmentally friendly, with underfloor heating, state-of-the-art cooling systems, good ventilation, photovoltaic cells on the roof, lower energy costs and charging points for electric cars and trucks outside.

‘We see high demand for modern facilities in 2017, warehouses with sustainable technologies that can be differentiated according to tenants’ needs,’ added Bischoff. ‘In Germany, only 3 out of 10m2 are new, so that is a huge driver of logistics. Outdated buildings need replacing, and the replacement volume is enormous.’

Payback for landlords
There is a payback for landlords, Bischoff said: ‘You can charge higher rents, it easily covers the additional investments made and it becomes a win/win situation for us and for our tenants. It is also easier to get permits from the authorities to build sustainable warehouses.’

Germany, the UK and other northern European countries are leading the charge with regards to technology and sustainability, but the rest of Europe will soon follow. Demand is increasing across the Continent.

The Netherlands, for example, is attracting investors from far and wide. ‘The UK and US account for 75% of capital invested, but there is also money coming in from other EU countries and from Asia,’ said Douglas von Oers, associate director logistics & industrial at Savills. ‘More speculative warehouses are being built, which is good because supply is low, and many online retailers are using Holland as a gateway to the rest of Europe’.

Germany’s position in the centre of Europe and its status as the Continent’s economic powerhouse and ‘export world champion’ are also attractive to investors, Bischoff said. The UK market is also expected to continue growing despite the uncertainty over its transition out of the European Union.

‘Brexit brought capital inflows into Germany like never before, but we still see good opportunities to invest in the UK, partly because land is getting cheaper,’ said Bischoff. ‘Demand will continue to be high in the UK, in Germany and all over Europe. The logistics growth story is far from over.’