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Logistics market upturn continues despite coronacrisis

uk

Already before COVID-19 reared its ugly head, back in the days when corona was a drink, the logistics property market was on a roll. At the moment, the market is undergoing some changes due to an increased prevalence of buffer stocks and accelerating e-commerce. However, Colliers does not expect this to fundamentally weaken the demand for this type of property.

“For some time now, we have seen historically low industrial/logistics vacancy rates throughout the country. The coronacrisis has done nothing to fundamentally change this. New facilities continue to be the most coveted, and e-commerce continues to thrive, in fact accelerating as the crisis wore on. Businesses opting for old storage facilities have done so out of necessity because they were stuck with some goods that could not sell in physical shops. This has served to put pressure on existing storage facilities,” says commercial real estate advisor with special industrial/logistics market expertise Jacob Widahl, Colliers.

So far, the market for this property type has weathered the crisis fairly well, and Colliers has detected no significant increase in lease termination activity.

“Our clients (landlords) have predominantly encountered inquiries relating to respite of rental payments and rental discounts from small-size tenants, but not a widespread lease termination trend. Once the market returns to normal, we may well see a general increase in storage demand as the businesses that have experienced place problems want to avoid them in future; They will be looking for a higher degree of flexibility,” says Jacob Widahl, elaborating:

“Businesses will probably tend to focus not only on supply chain efficiency, but also on increased storage capacity so as to be able to quickly adjust to demand fluctuations, etc.”. 

In the analysis, Colliers predicts that e-commerce will affect the market for many years to come. It will continue to affect the actual logistics building stock, but it will also be one of the factors determining the future type and location of new facilities. For instance, major urban areas – notably Copenhagen – will see demand for local facilities due to the heightened focus on last mile delivery.

View the full analysis, including vacancy data for the segment, a survey of changes in business inventories as well as a heatmap of storage facilities by sq m space, here.


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Jacob Widahl

Director and Head of Industrial & Logistics, Copenhagen

Copenhagen

Jacob’s primary areas of expertise are mediation of industrial and logistics properties (sale and letting) as well as project and investment properties, including sale and lease back.

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