Decisions made from the occupier’s point of view

Logivalue’s Raimund Paetzmann explains why the company prices buildings based on their likely use, not comparables.

Every broker can provide comparables, but few will tell you what a logistics building is actually worth. A comparable records what someone else paid for a different building, using different network logic based on a different point in the cycle. For years, in a growing market, a comparable was good enough. Today, it’s not enough.

Decisions that once looked straightforward now carry real risk. Many are still made on an average rent drawn from past deals, by parties who share the same blind spot. In logistics, that blind spot has a name: the occupier.

The 30-year product

There is a strange asymmetry in how this asset class is treated. The car industry runs years of customer research for an eight-year product cycle; consumer electronics does the same for devices that last 10 years. Poured in concrete, expensive to alter, and in use for 30 years or more, a logistics building outlives both. Yet it receives a fraction of the thought given to products with shorter lives.

Investors specify it to a market-standard template and underwrite it to a comparable, rarely consulting the occupier who has to operate it for decades. That judgment comes from running these buildings, not from leasing them.

Two eyes, one building

Comparables float on the surface. The value sits below – in how the building serves the supply chain.

A shallow 80-door cross-dock and an automated fulfilment centre of identical floor area are entirely different businesses. We have identified 65 distinct property topologies.

A cross-dock operator squeezes every cent on rent, because the building is a pass-through cost. A last-mile tenant on the right site pays a premium without blinking, because proximity and drop density save a multiple of what the building costs. Same asset class,
different value drivers. Rent is a function of total cost, and an investor who cannot read a building through the occupier’s eyes is underwriting an assumption he cannot check.

The chain is being redrawn

The network itself is moving. European logistics was built for push: forecast-driven, with high static inventory and large buildings holding stock until demand caught up. What is being built now is pull: demand-driven, more throughput, import hubs and middle-mile. New corridors from Asia land in Duisburg or terminate at Polish gateway hubs that barely existed ten years ago.

A comparable cannot see any of this. It is the record of a market that already exists: accurate, and late. The box that looks safe against today’s comparable can be stranded when the corridor reroutes around it. Re-lettability is a network question before it is a building question.

What 10% costs

In a market where rent drives valuation, a 10% variance in achievable rent on a mid-sized asset creates a multi-million-euro swing in appraised value. With debt costs elevated and yields repriced, the tolerance for imprecision has narrowed to almost nothing. Comparables alone do not close that gap. What closes it is knowing how an occupier decides: what the building is worth to a specific tenant, inside a specific network.

What we provide

We bring the occupier’s perspective into the investment decision. We price a building on its most likely use, not on the last comparable and we call it Investment Intelligence.

Logivalue brings together experience from both sides of the table: networks built from the inside at Amazon and Zalando, and 25 years negotiating opposite the sector’s largest developers and investors.

We see more than generic logistics boxes. Logivalue works with 65 distinct property topologies, each carrying its own tenant set, rent drivers and re-letting risk. Two buildings of identical floor area can sit 10 topologies apart, and should be priced accordingly.

We are independent advisers with no pipeline that depends on deal volume. For an investor working through dozens of brochures a month, that is the difference between months of due diligence and a flawed assumption caught in the first week.

A warehouse is a node in a network – its value depends on what flows through it, and where the network is heading.