Not that long ago, property companies needed persuading that a company called Amazon was an investment-worthy tenant. Now e-tailers are calling the shots and driving demand for warehouse space in Europe, writes Robin Marriott.
In the US, warehouse rents are rising fast as e-commerce consumes space faster than it can be built. Around 20% of warehouses are now leased by online retailers, says Prologis. Over here in Europe, perhaps we shall see the same as e-commerce is becoming such a big driver of the industry. Who knows?
It feels that this is only one area causing some excitement but also consternation as industry participants formulate strategies and manage risk. In the UK, the retail sector was recently shaken by two events. On 23 May, Tesco Direct, the supermarket’s non-food website, said it is shutting down with the loss of 500 jobs. The next day, a fellow retail household name, Marks & Spencer, reported a 62.1% drop in profits dragged down by poor clothes sales and the cost of closing stores. It announced another 100-plus are to shut by 2022 out of its network of 300. Doing better than M&S are no-frills chains such as Primark, Aldi and Lidl and although M&S said its online sales are growing, its website is too slow and it is behind stronger competitors.
Mind you, there's plenty of pressure on the pure-play online retailers too. We like to big up the successful ones, but my contacts in the logistics world say don’t forget that behind the scenes quite a few go bust too. It’s dog eat dog. As a developer or landlord it is not easy to pick the winners from the duds. Remember, not that long ago property companies needed persuading that a company called Amazon was an investment-worthy tenant.
Making sense of these trends is David Sleath, CEO of Segro, who spoke to PropertyEU’s Jane Roberts about the success and challenges faced by a modern-day industrial property company. Its share price rise suggests it is winning (read the full interview in PropertyEU's May issue). Our May edition also features our annual Top 10 logistics developer ranking showing you who is winning in terms of project completions.
And talking about picking winners, what do you think of Colliers International? The global listed property services firm has taken a big stride to becoming a major investment manager. Just six years ago the firm was on its knees and got sold to a Canadian company, but it is entrepreneurial, acquisitive, and not to be underestimated.
And while we are on turnaround stories, we also bring you a special report on Greece by our reporter, Virna Asara. In August this year, the country emerges from eight years of economic bail out conditions. Its real estate sector got battered and part of Greece’s plan to get back on its feet involves Greek banks restructuring or auctioning off roughly €40 bn of bad real estate loans over the next 24 months.
Enjoy the issue!
Deputy editor in chief