New investor pool will target logistics’ continued growth

Despite the current headwinds that have risen potentially to curtail the bull run that logistics real estate has enjoyed for the last few years, the sector is unlikely to experience a development-led vacancy increase and rental growth can still be expected.

So said Savills head of EMEA industrial and logistics research Kevin Mofid speaking after Real Asset Media’s recent logistics investment briefing.

But although the supply-demand dynamics indicate rental growth, the picture could be different on the capital market side of the equation. Increasing inflationary pressures over the last six months and rising interest rates have increased the cost of debt.

“I think it’s inevitable that we will see some form of correction on the capital market side of things primarily driven by the increased cost of debt,” Mofid said.

Mofid said that large amounts of capital are still targeting the logistics sector. “What that potentially means is we will see a different investor pool emerge, different sources of debt and capital emerge to deploy into a sector which still has fundamentally strong occupational signals.”

The first quarter of 2022 saw record levels of take up. “We’re seeing amplified levels of requirements with occupiers still competing for the best space on the market which is continuing to push rents,” he said.

Click on the video to watch the full interview or listen to the podcast below.