‘More capital directed towards logistics’
The strength and importance of the logistics sector will emerge reinforced from the current crisis, experts agreed at Real Asset Media’s European Logistics Investment Briefing this week, an online event attended by 300 participants from 27 different countries.
‘Our view is that logistics is the most resistant asset class,’ said Robert Dobrzycki, CEO, Panattoni Europe. ‘Next year, when the dust settles, there will be a substantial re-direction of capital towards our asset class, which will be very positive for the sector. Banks feel the same way’.
Many feel they are under-invested and will seek to deploy more capital in logistics, as the sector’s resilience and importance has been highlighted by the coronavirus pandemic and the shift to online shopping.
‘There will be a lot of demand for logistics when this is over,’ said Stephan Riechers, Senior Investment Manager Logistik, Union Investment Real Estate. ‘Institutions will seek to reallocate capital into logistics and away from other sectors like hotels or retail’.
Take-up of logistics space and rents will increase as vacancy rates go down. ‘Supply dynamics are still very favourable to landlords,’ said Kevin Mofid, Director of Research, Savills. ‘We’ve seen spec developments fall, so grade A supply is likely to decline, which points to rental growth’.
Savills research shows that a 12% vacancy rate is the point at which rents start to fall, and no European country is at that level. Copenhagen has the lowest rate at 2.1% and Madrid the highest at 9%, but most cities are at the lower end of the scale.
‘The average vacancy rate in Europe has dipped below 5% for the first time on record,’ said Mofid. ‘In the UK the vacancy rate is 6.8%, so it would take 40 mln sq ft of supply to come to the market for the rate to go up to 12%’.
People are prepared to pay ‘a significant premium to be in the right locations, precisely because of the problems in the supply chain highlighted by the coronavirus crisis’, said Marcus de Minckwitz, Director, Omnichannel Group, Savills.