Defense push in Europe to drive demand for logistics

Light industrial will be a big growth area as Europe expands its defense capabilities, experts agreed at Real Asset Media’s Locations of the future: key trends driving logistics real estate briefing, which took place this week at Transport Logistic in Munich.

¨Autonomy and self-resilience have become great themes in Europe, and logistics is absolutely key to this shift¨, said Edward Plumley, Director EMEA Capital Markets, Co-Head Industrial & Logistics Practice Group, Colliers. ¨These are trends that were already there but they keep accelerating.¨

The defense industry will play a crucial role in the near future, as Germany alone is set for €1 trillion of investments to close the gap in defense capability and other countries will follow to make the European Union more self-sufficient. 

¨Defense is not just tanks and aircraft¨, said Raimund Paetzmann, Managing Partner, logivalue. ¨Think drones, munitions, backpacks, uniforms or boots. Light industrial will definitely be a growth area.¨

There will be factories and warehouses for defense purposes everywhere in Germany and other countries.

The current geopolitical situation is leading companies to shift to friendlier countries that are also closer to their customers.

¨The trade network is becoming more Europe-focused¨, said Maximilian von Medem, Investment Management Logistics DACH, Union Investment. ¨So there is a big consolidation underway to improve the supply chain and do friend-shoring.¨

But this trend to look for space in Europe is not confined to European companies.

¨Defense will be a big driver of logistics, but not the only one¨, said Killian Mahler, Managing Partner, Periskop Logistics. ¨We are also seeing increased demand from Chinese and Asian companies that want to come to Germany.¨

Asian companies also want to be closer to their customers and are re-configuring their supply chains, said Pascal Laucht, Senior Investment Manager Logistics, Swiss Life Asset Managers: ¨A lot of Asian companies are looking for space in Germany, especially in the e-commerce sector, so demand is increasing.¨

Another sector that is set to become more crucial is infrastructure, from airports to ports to motorways. ¨Areas in Germany near the Dutch ports are really attractive, and one location to watch is Wilhelmshaven, which is the only deep water port in Germany¨, said Mahler.

¨All the developments around infrastructure nodes, especially ports from Marseille to Gdansk to the UK Thames Gateway, will become more important¨, said Plumley. ¨Industrial Outdoor Logistics (IOS) is an undervalued area of logistics that is set to grow.¨