Logistics "skyrockets" in 2021 thanks to online shopping

Logistics "skyrockets" in 2021 thanks to online shopping

The periods of confinement generated by the pandemic increased the levels of online commerce, a trend which may significantly boost the logistics segment in Europe this year, and Portugal will be no exception. According to Savills, «it might actually be the booster which will bring never before seen numbers to the logistic segment», resulting in resilient occupancy results and a strong demand from investors.

According to the consultant, logistic assets’ occupancy remained resilient between January and September 2020, with a total of 21.8 million sqm occupied in Europe, 10% more than the previous year. Holland, Poland and the United Kingdom registered some of the higher yoy increases, with 56%, 33% and 46% respectively. The United Kingdom registered an occupancy record with more than 3.5 million sqm. But it was Germany that continued to dominate, with more than 5.1 million sqm, a 1% yoy increase.

Within the Iberian Peninsula, logistic demand increased 7% in Spain and 35% in Portugal, a «resilient growth, based on the e-commerce penetration rates’ increase», according to Savills.

Mike Barnes, European Research Associate at Savills, pointed out that «online sales, which were, for many retailers, the main source of trade during the first confinement period generated by Covid-19, received, as was expected, a substantial increase in 2020». As a result of this acceleration, «we witnessed a substantial increase in terms of logistic spaces’ occupancy during the last three quarters of 2020. Consequently, vacancy rates remained stable registering a 5.3% average in Europe by the end of last year’s third quarter».

According to the expert, «all the main indicators point towards an increase in demand for warehouses in the future, particularly in urban areas, which will result in record levels of competitiveness, both amongst developers and occupants, and amongst investors».

«With a current limited offer, we predict rental growth will recover in the European markets in 2021, especially because of the lack of last mile facilities», he added.

New offer will reach the Portuguese market this year

Pedro Figueiras, Industrial & Logistics Associate Director at Savills Portugal, commented that «Portugal is not an exception to this Pan-European trend. Taking into consideration the already low logistic stock, this increase in demand sold out almost all available units, thus creating a bigger pressure towards rents’ increase».

According to him, «this year will also be marked by the arrival on the market of units which are currently under development and which, being more modern and efficient, will have a positive contribution towards the rents’ increase».

Investors’ interest booming

According to Pedro Figueiras, this demand led to a «clear increase in terms of attractiveness and consequently available capital for the allocation of this type of assets. According to this reality we can expect that, with the placement of new product with solid «covenants» and the aforementioned increase in attractiveness there might be a yield compression».

He is convinced that «whether this way or through rent growth the conditions will be ideal for an increase in the logistic assets’ capital value in Portugal».

In terms of the rest of Europe, logistic transactions reached 22 billion euro between January and September 2020, slightly below the numbers of 2019, but in line with the 29 billion yearly average of the last five years.

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