LOGISTICS WATCH: A storm called opportunity

Our first-ever edition of Logistics Watch was conceived as a snapshot of a sector which has moved centre stage in commercial real estate. It has turned out to be many things, writes managing editor Isobel Lee.

Investors have been known to head for ‘any port in a storm’, but the logistics phenomenon in the wake of Covid-19 has represented anything but a last resort.

Has the global pandemic provoked widespread economic crisis, depressing rental collection, even in this buoyant sector? Yes. Has it devastated the markets for industrial real estate? Hardly.

In fact, 2021 has seen real estate investor sentiment converge around the idea that industrial and logistics is close to the ideal trade right now. Even if rental growth has been sluggish outside key metropolitan areas, yield compression has been nothing short of spectacular across Europe. The expectation of future rental growth has inevitably been priced in but there is no reason to believe that it will not come, no matter the bumps in the road ahead.

Our first-ever edition of Logistics Watch was conceived as a snapshot of a sector which has moved centre stage in commercial real estate. It has turned out to be many things: a missive highlighting the latest research; a place to analyse trends; and, perhaps most importantly, a vehicle for the voices of those who work in the business. It is your voices – from logistics developers to space-hungry occupiers and technological innovators – which we think make this issue unique.

While the wall of money chasing industrial opportunities has never been higher, institutional property investors remain hugely underweight on logistics in comparison to other commercial sectors. Green Street Advisors calculate that if you take all the stock in the highly fragmented pan-European industrial sector, only 5-10% is owned by listed property companies. So, while on the one hand, logistics is very much front and centre of debate for property funds right now, there is also plenty of road yet to run.

In this issue, we take a look at trending topics, from investor interest in assets ranging from data centres to last mile properties, as well as zoning in on key occupier behaviour, with a focus on Amazon. We look at increased sophistication in warehouse development – from underground initiatives to ESG and automation – as well as addressing issues such as how big boxes are changing the landscape of towns and cities.

In just over a decade, prices for industrial assets have soared by over 60% in Europe, and in the last year alone, the great e-commerce revolution has had a spectacular impact on demand. But it’s the range of occupiers in the sector which bring the most hope. Research suggests that even if e-commerce growth hits pause in the next two years, ‘just in case’ stockpiling may entirely offset changes in occupier demand: clearly, Brexit and supply chain issues during the pandemic have left significant scars.

So, the happy conclusion for now is probably that there’s nowhere we’d rather be. Enjoy the issue!

Isobel Lee, Managing Editor