Another year and another MIPIM where everyone seems to be talking about the strength of logistics property across Europe. I think its more than safe to say that our sector is more than just a short term star, it's now an established asset class backed by robust fundamentals including intense investment interest in platforms, portfolios and individual assets as well as strong and growing occupier demand.
CBRE’s annual EMEA Investor Intentions Survey, launched at MIPIM, showed that industrial property, and specifically logistics, is the most sought-after real estate sector for European investors, overtaking offices for the first time. At the “standing room only” PropertyEU’s European Logistics Investment: Outlook 2020 in Cannes last week - which P3 sponsored - I and my co-panelists discussed where we are now and where we are going.
We were all confident that the high levels of customer demand are set to continue, particularly off the back of growth in the eCommerce industry - currently only 8-9% of all logistics, but set to increase exponentially. This is no surprise to us. P3 started 2018 with a vacancy rate of less than 3% across our 4.1 million m2 portfolio and we heard it reported that currently more than 80% of all speculative logistics projects are let prior to completion.
What do the next few years have in store? There can be no doubt that new technology is set to bring about profound changes in the supply chain, transforming the way in which our customers use their warehouses and that this will have implications for logistics property. At the same time, advanced construction technologies are already enabling P3 and others to develop increasingly sustainable buildings - reducing energy and water consumption in order to deliver real operational cost savings to our customers and reduce our environmental footprint.
Here at P3, we have been considering and investigating the role that new tech will play in future business, consumer and public behaviour and the consequences for the supply chain for some time, including hosting an annual conference which brings together experts from all sectors to discuss this very subject. Check out the 2017 conference here: www.p3momentum.com/p3-conference-2017
And we are not alone. While other sectors seem to be in denial about the impact of technology, logistics property people are certainly talking about it. As one of the speakers at the PropertyEU event said, we may not be in the driving seat of change, but at least we are in the car.
What we believe is important is that the fundamentals will remain the same - for example, a good location (close to a population centre and with motorway access) will remain a good location. At the same time, we are future proofing our buildings - installing the infrastructure for electric vehicle charging points so that they can be easily retrofitted for example - and ensuring they are highly flexible.
It seems to me that with the right mindset, open to adaptation and change alongside our customers, logistics property will continue to outperform the market for years to come.
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