Stars are aligned for logistics despite the recent headwinds
Nick Preston recently joined Panattoni group to establish and head up the Panattoni Investment Management platform. He explained to Real Asset Insight’s Richard Betts what the strategy is behind his appointment.
“The Panattoni Investment Management platform is a new entity. It will be very closely associated with the group yet completely independent for decision-making purposes.”
He said that the idea is to broaden the business to be able to attract different new capital sources to Panattoni and ultimately to help it grow.
In future the company will have more of a develop-to-hold philosophy. “The Panattoni business model to date has been develop and sell, partnering with investors through that process. This is very much more a develop-to-hold approach where we’ll be looking at longer term investment strategies.”
The logistics market remains strong, despite the correction in the capital markets driven by interest rates and other macro issues, Preston explained.
“Fundamentally the logistics sector is still benefiting from a lot of the very high-level systemic effects that we have been seeing over the last years, whether this is e-commerce, changes to supply chains, all of this is helping push the demand side,” he said.
Furthermore, ESG means occupiers are demanding the highest quality, greenest buildings for their businesses.
“From the demand side, modern well-located and green logistics properties are very much in vogue with occupiers and there’s good demand in all the core markets across Europe,” said Preston.
Meanwhile, the supply side is finding more resistance to green-field development and it is more challenging to find sites to develop very large buildings.
“When you couple together the supply constraints and strong tenant demand we see that the fundamentals of the logistics market are very well set for the long term. Yes, we’ve been riding through this period of turbulence in the capital markets recently but fundamentally we think that the income generation prospects of the logistics sector across Europe are very strong.”
ESG is a must-have for occupiers, investors and lenders. “And it’s a must-have for us,” he said. “All of the stock that comes through the Panattoni pipeline is obviously all developed by Panattoni, therefore we can select and choose how we develop. Green specifications are becoming more and more prevalent and there’s more and more of it every year across all markets in Europe.”
He said that some are more advanced than others. “This is a fundamental drive across all these markets that the green specifications are improving year on year on year,” Preston added.
