Logistics will prove to be the most resilient asset class because it has been the first to embrace technology, delegates heard at the PropertyEU European Logistics Investment Outlook 2020 briefing, which was held at Mipim in Cannes.
‘We are taking technology on board more than any other sector in real estate,’ said Logan Smith, head of Logistics – International Investment Group, BNP Paribas Real Estate. ‘Technology will bring about profound changes, but at least in this sector we have the opportunity to be in the driving seat, or at any rate in the passenger seat with a good view of what is happening.’
Driverless cars, blockchain, automation & robotics and 3D printing are all technologies that have the potential to overhaul the entire supply chain. Collectively, they are set to have a profound impact on logistics.
‘The fact is that the changes technology will bring about are going to be just as profound for other asset classes like offices, retail or multifamily, but at least in the logistics sector we are talking about the issue and taking it on board,’ said Smith.
Increased automation will reduce the need for workers
The changes will be considerable, said Ian Worboys, CEO, P3 Logistic Parks: ‘Now a recurrent problem, especially in Central and Eastern Europe, is the availability of labour. But in tomorrow’s warehouses there will be a lot less people because of automation and robotics, so we will have the opposite problem.’
One of the reasons why the logistics sector is not afraid of technology is that it has always embraced it, said Smith: ‘It did not show up suddenly a couple of years ago, it has been fundamental to the growth of this industry since its inception. Think of electronic data interchange – EDI – which 20 years ago led customers to change their business model.’
Another characteristic of the logistics sector that will hold it in good stead is its adaptability to change, said Rémy Vertupier, fund manager logistis, AEW: ‘Flexibility is necessary to continually adapt your asset and we know how to be flexible. The one thing you cannot change is the location of your warehouse, so in all this upheaval the rules will remain the same. Find a good location and then build, adapt and innovate.’
Whatever changes technology may bring, the safe bets remain good locations close to population centres and motorway junctions. ‘Choosing the good locations is the best investment because it is a defensive strategy,’ said Pierre-David Baylac, head of logistics, CBRE Global Investors.
Urban logistics is promising but tricky
Urban logistics is one of the most promising, if challenging, sectors to move into, he added: ‘There is so much demand for it, but it is a tricky business and land is difficult to find.’
P3 Logistic Parks is a developer as well as an investor and has recently started P3 Urban Logistics, buying locations – mainly brownfield sites - around Europe to give retailers a vertical service, from big boxes to last-mile delivery.
‘We did a lot of research before we started to buy and we think it will become its own sector because it is so important for retailers to be able to get goods to customers on time,’ said Worboys. ‘In Berlin, where we did a study, with four urban logistics warehouses you could get anywhere within half an hour.’
The main challenge, he said, is the lack of available land and the competition with residential for suitable sites.
