Buying ‘last mile’ logistics assets will form the second phase of the Healthcare of Ontario Pension Plan’s push into the logistics market, as the Canadian scheme looks to benefit from the continued growth of e-commerce.
Lisa Lafave, senior portfolio manager for real estate at the CAD60.8bn (€43bn) fund, said the changes in distribution networks triggered by e-commerce offered opportunities to invest, with European assets deemed most interesting.
Speaking during a panel on the impact of technology on property at the IP Real Estate Global Conference in Copenhagen, Lafave noted that the current logistics portfolio, part of a €1bn push in partnership with Verdion, consisted of assets that were tailored to the individual needs of tenants.
“We’ve been successful in running the programme, with so far three [assets] in Germany, one here in Copenhagen, and we are keeping a land position in the UK,” she said.
She said the second phase of the programme would see HOOPP looking into ‘last mile’ logistics centres that would coordinate the delivery to household, although she accepted that sourcing the investments could prove difficult due to their price, with precise details of the strategy yet to be decided.
Lafave emphasised the need to approach potential tenants and ascertain their needs before investing.
“From the standpoint of philosophy, it is ‘the customer comes first’, so what do you want?”
Other speakers saw a trend towards mobile commerce, with Nick Russell, chief executive at We Are Pop Up, highlighting the need for shops to act as curators.
“This is what off-line retail is really good at,” he said. “It’s curating a small set of items because, right now, if you go on Amazon, you have endless choice and endless selection – and consumers don’t want endless choice and endless selection, they want curated selection.”
Nathalie Charles, head of asset management and transactions at AXA Real Estate, noted how the rise of technology had changed the approach to office space but also retail.
“I would say what has really changed for me […] is that we are not addressing the needs of tenants any more, we are addressing the needs of final consumers,” she said.
But two others panellists threw their support behind physical over virtual stores.
Hamal Shah, partner at Azimuth Global Partners, noted the failure of e-commerce start-ups in Asia – and identified weather as a reason.
“Shopping includes air conditioning, and families go to shopping centres because it’s air conditioned.
“It’s much more of a leisure experience. There’s a lot more F&D [finding & development] leisure in shopping centres.”
Richard Gwilliam, head of property research at M&G Real Estate, compared the UK and its strong growth in e-commerce with warmer countries such as Spain and Italy, where online shopping is less prevalent.
“The weather actually does play a little part in this,” he said. “Sometimes, on the great British high street, it’s raining. People don’t want to go out. In Spain and Italy, people actually go out for the experience.”
However, he cautioned against playing e-commerce and its traditional counterpart off each other and urged people to see them working together by considering stores as potential show rooms, even if the purchase later occurs online.