Getting ‘under the skin’ of nearshoring criteria crucial

Nearshoring represents an interesting opportunity for locations and real estate across the EMEA region said Sally Bruer, head of EMEA logistics and industrial research and insight at Cushman & Wakefield.

In an interview with Real Asset Insight she said that what is really interesting to understand is that the drivers of nearshoring are slightly different to those that we may have assumed. Bruer pointed out, for instance, that it is not just about cost. Other factors have ascended the corporate agenda.

Social responsibility, sustainability, impact, understanding what investment means and what manufacturing means in different geographies, are all among these. “But also things like the geopolitical situation informing the choices that businesses now make,” Bruer added.

Trying to get “under the skin” of what is driving the choices made by different sectors is important because as it is not the same in each. That then informs selection of geographies, countries and locations.

“For real estate, it’s a choice of locations but also specification,” she pointed out. While ‘new’ is the most operationally efficient. It is crucial to understand the energy component particularly for capital intensive industries in which automation creates a major energy requirement.

Bruer said it is also important to understand the implications for different real estate stakeholders – occupiers, developers, investors – the opportunities and risks and how collaboration may create more opportunities.

CEE countries are in a strong position to capture some of the nearshoring opportunities. Costs are less there compared to those in the rest of Europe but proximity is also important as it reduces journey times and costs and reduces emissions.

There is a geopolitical dimension here too, in that many countries offer government support to projects locating there. That support can be local, regional and at an EU level.

“We’re seeing that in the evolution of EV batteries,” Bruer said. “And also in high-tech and semiconductors.”

“We are seeing an awful lot happening, but it’s not the same for every sector, it’s not the same for every geography. There is a lot of opportunity around existing locations where there is a clustering effect,” she added.