EXPO Real: Lack of product overshadows logistics sector

Strong demand driven by the inshoring trend is supporting the logistics sector, but lack of suitable space is putting a spanner in the works, experts agreed at Real Asset Media´s European Logistics Trends briefing, which took place yesterday in the International Investors´ Lounge at EXPO Real in Munich.

¨There is a definite shift to sustainable buildings and people want to be in the right locations, but the main challenge is finding the right product,” said Laurie Lagarde, head of EMEA logistics operator division, CBRE Investment Management.¨The supply issues are serious, not just in one or two countries but right across Europe.”

Vacancy rates on the continent are 3% and rents are increasing. The main challenge for occupiers is the short-term availability of suitable sites and modern sustainable buildings, on top of other problems like availability of labour and connectivity issues.

¨Companies are following a DE strategy,” said René Buck, president and CEO, BCI Global.¨They are de-coupling China, de-risking supply chains, de-single sourcing, de-centralising production, de-carbonising.”

A recent global survey conducted by BCI Global found that 47% of companies have already implemented significant changes to their manufacturing footprint over the last three years, in terms of production capacity, inshoring or nearshoring. Even more significantly, 60% of companies plan to do so in the next three years.

¨There is more hidden reshoring than people can see, a lot is happening under the radar¨, said Buck.¨We have talked about the reshoring trend for a long time, but now it´s really happening¨.

Nearshoring is definitely a reality. It is not just about relocating your activity but also about where companies choose to grow and expand and focus their attention.

¨Macro trends still support the logistics sector,” said Balasz Lados, managing director and senior fund manager, Realterm. ¨Risk appetite has shifted, but the outlook is positive.”

Demand for logistics assets is still relatively strong, rents are still rising and the attitude to the sector is still favourable despite the cost of capital, said Christopher Mertlitz, managing director, head of European investments, WP Carey:¨This is why as long-term investors we are optimistic.”