Logistics property is going up and up – quite literally, CEOs of four of the largest European logistics specialists have agreed at Expo Real.
European logistics is attracting record amounts of capital, as shown by the three latest acquisitions of European platforms - P3 Logistic Parks, Logicor and Gazeley - by Asian investors, which came to an aggregate total of €17 bn.
But the sector is also developing taller warehouses in response to clients’ demands, the CEOs told the Let’s Talk Logistics panel at Expo Real on Thursday.
The panellists, from left to right, were Ben Bannatyne, president of Prologis Europe; Robert Dobrzycki, CEO of Panattoni Europe; Mo Barzegar, CEO and president of Logicor, and Ian Worboys, CEO of P3 Logistic Parks.
'One of the biggest changes to come over the next two years is multi-level warehouses,' Bannatyne said. 'You get massive capital value per m2, but it also a massive leap of faith. Going multi-storey is quite a bet, but it is definitely the future.'
E-commerce is driving this shift and demanding higher ceiling heights, said Robert Dobrzycki, CEO of Panattoni Europe: 'Height is the biggest change specification-wise. 10m used to be the standard, but now 18 or 20m are becoming the norm.'
So far developers have accommodated this demand with non-structural steel mezzanines, said Mo Barzegar, CEO and president, Logicor, but Amazon is now demanding structural storeys. 'It is not a proven market yet, rather an unknown area that requires a convergence of design and thought,’ he said. ‘But clearly, there is a demand that must be met, especially as land becomes more scarce.'
Strong demand for logistics space has led to record occupancy rates, panellists said.
‘We are at 96.5% in all the twelve countries we operate in, it is the highest ever,’ said Bannatyne. What development there is gets snapped up very quickly, he said: ‘Most are build to suit, and the 40% that is speculative is mostly pre-leased, while the rest is leased instantly upon completion.’
P3 is also at 96-97% occupancy rate, said Worboys. ‘There is no oversupply because there isn’t that much spec space being built, so we also see rental growth in several countries,' he said. 'We have started speculative building where we see shortages in the market, and the buildings are usually let before completion. With speculative development, it is possible to charge higher rents.'
