This segment played such a leading role in terms of investment strategies, that the returns offered by the logistic segment are already on the same level as those offered by the retail and office segments, revealed the latest update of report ‘Impacts’, compiled by international real estate consultant Savills Aguirre Newman.
Paul Tostevin, director at Savills World Research, explained that «e-commerce's current peak across the globe, accelerated by the increase of online shopping during the pandemic, has been an important catalyst for the growth of this segment».
According to the forecast from CRR (Centre for Retail Research), online sales will grow around 31% in Western Europe in 2020, increasing the average use of e-commerce from 12% to 16%. Nevertheless, «e-commerce is not the only factor boosting logistic demand», added Paul Tostevin. «The recent change within the supply chain, together with the escalation of the trade wars, is leading to diversification within the distribution chain, boosting the demand for industrial and logistic areas in strategic locations closer to main consumer markets».
Savills pointed out that as investment competition for logistic and industrial assets has been intensifying, prices have been increasing and returns adjusting. The consultant shows that between 2007 and 2017 the average global yield was set at 7.5%, 70 base points above the average yield for offices. Nevertheless, during the second quarter of 2020, the average yield for the industrial logistic segment has adjusted to 6.1%, only 10 base points above the office segment’s global average yield.
Spain registered €534M up until June
Spain registered a total investment of around 534 million euro up until June, which «doubled the historical average». Nevertheless, Savills Aguirre Newman pointed out that, unlike the rest of Europe, retail keeps representing one-third of all investment in Spain. These numbers are explained by the operations concerning the two shopping centres from intu, which represented 55% of all retail investment during this period.
Antonio Montero, director of the Industrial-Logistic division for Spain, pointed out that «the logistic segment has become one of the most important segments in terms of investment demand in our market during the last few months and added to the acceleration of e-commerce over the sales of the distribution segment leads us to forecast a greater logistic absorption, especially in last-mile areas».
The consultant explained that, globally, as the segment has matured, there has been a change in terms of the type of investors and institutional capital and portfolio transactions have taken a larger share of all logistic transactions, due to pricing. The main funds and REITs are attracted by the long-term returns of this segment and there is a growing lack of assets since these remain with the same owner for longer periods.
Marcus de Minckwitz, director at Savills Regional Investment Advisory, EMEA, remarked that «the growth of the logistic segment is global and it is proving to be one of the segments most resilient to the global economic situation. There is an unprecedented level of demand from investors generated by Amazon and the main domestic players in each market. Likely, we will now see a new wave generated by the big Asian players towards the West. The current challenge will be finding opportunities. With many investors realigning their strategies towards the industrial segment, competition for the assets will be tremendous».