Demand for warehouse space set to increase further in future

The big drivers of the logistics market are still very much in play despite recent headwinds, Marcus de Minckwitz, Head of EMEA Industrial & Logistics, Savills, told Real Asset Insight.

 “The logistics occupier market and the structural change that we’re all big believers in we expect to continue for the next ten-plus years”, he said. “It has not changed and in fact actually it has been amplified in a sense by a lot of the issues and concerns that we’ve all been acutely aware of in the last few months and years”. 

Demand for warehouse space remains at an all-time high and the expectation is that it will only increase in future, he said. But “one thing we can’t escape from though is that logistics is not immune from wider macroeconomic events and concerns that are at play in the market, such as rising interest rates and inflation and it is feeling the effects of that as much as any other sector of real estate as well as any other asset class outside of real estate”.

There’s no softening or dampening of the general appetite to invest in the sector, but investors are looking at what is happening in the wider economy and being more aware of the pricing of logistics assets.

No investors have said they’re no longer interested in logistics or reduced their level of exposure of commitment to the sector, de Minckwitz said, and people are still raising money: “What’s changed is that people are thinking about what price is right and that uncertainty has meant that even though activity is not subdued, there’s been less competition and less depth to some of these processes compared to last year”.

However, the positive fundamentals of the sector mean that activity levels at the end of the year will look broadly the same as they were last year, he predicts.

Please click on the video above to watch the full interview or listen to the podcast below.