The Logistics & Industrial sector will prove resilient to all shocks from Covid to war, experts agreed at Real Asset Media’s European Logistics Investment briefing, which took place yesterday at MIPIM in Cannes.
“The starting point is so healthy that the trajectory for logistics will remain positive, whatever happens in Ukraine”, Frank Pörschke, CEO, P3 Logistic Parks. “Compared to other sectors, logistics is also resilient to an economic downturn”.
The war has created short-term uncertainty among investors but it has also highlighted the relevance of the sector and the crucial importance of geographical proximity.
“Covid started it, then the war escalated the near-shoring trend”, said Robert Cotterell Head of Investment Europe & Head of UK , Cromwell Property Group. “It was car makers first that struggled to get parts, then it extended to more manufacturers. That need will only intensify in future”.
Near-shoring means companies will want their inventories closer to hand and that means more warehouse space. The logistics sector will also benefit from the re-organisation of supply chains and from wider geopolitical shifts.
“As retail and supply chains change there’s a shift to a greater demand for logistics”, said Daniel Harris, Senior Managing Director, Head of European Investments, CAIN International. “Some Western economies are turning their backs on globalisation and want more reliable supply chains across all sectors”.
Different shocks, from the increase in the cost of imports from China to the Suez Canal blockage and from Covid-19 to the conflict in Ukraine, are highlighting the need for predictable, reliable supply chains.
“Globalisation used to be a driver of logistics but now it’s being dialled back”, said Pörschke. “But there are two main drivers that will keep pushing the demand for warehouses and they are the growth of e-commerce and the resilience of supply chains”.
After being relegated to the background by more glamorous asset classes, Logistics is now being recognised as a sector that is crucial to the functioning of our economic system.
“Collectively we are realising that Logistics & Industrial is a critical piece of infrastructure of modern cities just like the electric grid”, said Logan Smith, SMD – Head of European Logistics, Hines. “Logistics always traded at a discount to offices, now it’s trading at a premium. It’s a very exciting time to be in the sector and I don’t see it changing for the next few years”.