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#MeetTheExpert - Faustino Musicco | Head of Logistics, Last Mile & Data Centers, Italy

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Faustino Musicco, Head of Logistics, Last Mile & Data Centers in Colliers Italy, talks about the transition from Home Delivery to Instant Delivery and its consequences for the environment.


How long have you been working in the real estate industry and how did you end up at Colliers?

I’ve been in the real estate industry for about ten years. I started out at a merchant bank as a real estate investment analyst covering all asset classes. In 2014, I joined the Jones Lang LaSalle logistics team, where I handled letting, logistics properties and land development for the construction of warehouses or distribution centres. Then I moved to Colliers in December 2020, enticed by a very interesting, young, long-term project with a rock solid foundation. I jumped at the chance because I knew Colliers was an international brand of world renown.

Today, I handle letting and investments for major investors in three different asset classes: logistics, in the sense of the traditional distribution of goods, i.e., distribution centres; the last mile; and data centres, where we are seeing the highest growth rate now and over the next few years. My job at Colliers is guiding both letting and investments within a single team. This means matching the demands of capital markets with the needs of users. Our goal is to start with the users’ needs and work backwards: we look at the tenant to identify the area, i.e., the land, and then we find the investor to develop the project. There are four members on the team who aim to grow together, driven by the extremely favourable market trends.

We have gone from home delivery to instant delivery. This change of paradigm has driven countless players to redesign their logistics networks. 

In the year of the pandemic, the boom in online shopping impacted the logistics sector, which held strong and became highly strategic, especially in terms of data driven and last mile investments. What are the repercussions for logistics properties?

Until a few years ago we were willing to wait a few days for a product to be delivered to our home. Now, in the wake of the pandemic, if we don't receive the package the same day or the next day, we might not even want it any more. We have gone from home delivery to instant delivery. This change of paradigm has driven countless players to redesign their logistics networks. One of the implications that this has had on real estate is a review of distribution processes, particularly the last mile, which is also called the last touch. It is the most delicate link in the chain, because “last mile” delivery accounts for roughly 41% of costs. This means that a vast number of players are now looking for properties close to consumption centres, i.e., large residential areas, and the distance in minutes from the residential area is now more important than the distance in km from the motorway exit.

As for data centres, the greater need for connectivity that we are all experiencing and the amount of data that we need to save when we work remotely have pushed companies to outsource their data management. This has led data centre operators to open increasingly larger buildings to store data. These are two of the areas in which we are seeing high demand.

We should prioritise the conversion of existing properties that are no longer functional or adequate, rather than using green fields

What strategies will need to be rolled out in the near future for more sustainable logistics that are also higher tech and increasingly capable of meeting consumers’ needs? What choices will logistics players make to maintain the high performance demanded in this industry?

Until not long ago, the container was more important than the content, which is to say that the real estate counted more than what you did inside it. Now we are seeing a change of paradigm: content is more important than the container, i.e., the technology in the buildings is becoming increasingly crucial. Take automated systems for instance. Most likely buildings will no longer need to be 12 metres tall, as they did in the past, or narrow as per logistics standards. They might even be developed vertically. There are already 20-25 metre tall towers where automated or robotics systems are installed. The most prominent example is Amazon, the first company to have adopted robotics for logistics in its buildings. In this way, properties are no longer just a warehouse where you store products on shelves, as we collectively imagine them to be. They can be divided into various mezzanine floors where a robotics system moves the merchandise. This is an aspect that we cannot afford to overlook in the years to come, including from the perspective of employment, which is one of the many delicate aspects to consider.

We see sustainable logistics taking one of two routes. The first: when new warehouses are built, as a matter of sustainability and land use, we should prioritise the conversion of existing properties that are no longer functional or adequate. Rather than using green fields, it would be preferable to use former industrial properties that it no longer makes sense to continue using that way, but that can be converted for logistics use. The second: when we build on a green field, we need to assess the environmental impact of the new construction and try to offset it, for example by planting trees to absorb CO2. Today, many towns are asking logistics developers to use an offset system of this type to compensate for their land use and emissions.

In a broader sense, what are the biggest challenges that real estate will face to meet growing demand for green assets and working towards the Agenda 2030 Sustainable Development Goals?

Achieving sustainable development also means designing smart buildings with AI systems that reduce energy consumption, optimise it and manage it more efficiently. There are many new real estate projects that, today, are beginning to have these features. The other issue is LEED certification for buildings constructed according to specific sustainability criteria. For the next 3-5 years, tenants will increasingly demand more properties with LEED certification, especially after the pandemic.

We need to explain what logistics and distribution mean. We need to work on the culture to explain what actually happens inside the various warehouses when an order arrives.

As President of FLC you have seen the rising awareness among young people about maximising social-environmental commitments and creating economic value through sustainability. How much will Gen Z be able to redesign business models and corporate culture in the near future?

We have a large group of young people at FLC, and most are focused on sustainability, so much so that we have had to start up one of four working groups specifically devoted to this issue.

A lot of corporate culture leveraging is necessary to bring the value of sustainability to the logistics change. One tangible example is that today, as consumers, we are used to free deliveries, which drives us to continuously order online, and we don’t often realize that behind every order there is a little truck that has to pick up a package from a warehouse somewhere and carry it to us. So in reality, this constant online shopping that we have grown accustomed to has a huge environmental impact. This is one of the issues we are working on now: raising awareness among young people, who have grown up with free home delivery within a few hours, so they understand that in reality the cost to the environment is high. We need to explain what logistics and distribution mean. We need to work on the culture to explain what actually happens inside the various warehouses when an order arrives. The pandemic has shown us that logistics is fundamental, but it has also had an environmental impact that cannot be overlooked.

Are young people able to meet this challenge?

It is attracting a lot of attention but in practice, there is still so much to do. We are trying to engage young people as much as possible, along with trade associations that deal with these issues. We will be holding a series of meetings and will invite opinion leaders in the sector, mainly for young people and universities. The path is long, but there is no doubt that we must take it.


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Faustino Musicco

Head of Logistics, Last Mile & Data Centers

Milan

Head of the team dedicated to Logistics, Last Mile & Data Centers at Colliers Italia, Faustino handles investment and leasing activities for key national and international players.

His previous experience in the sector includes 7 years as Head of the Logistics Agency Team at JLL Italy, focusing on letting, development and redevelopment from greenfield/brownfield, leases of existing properties and logistics hubs. He was a member of the JLL Italy Business Committee since 2018.

Following his Degree in Economics and Corporate Management, he earned a Master’s in Real Estate from the Milan Polytechnic and an MBA from the MIP Business School, with an Exchange Program at the School of Inspired Leadership in New Delhi.

In June 2020, he became Chairman of FLC Freight Leader Council Young, an association of young logistics experts that focuses on sustainability, innovation and digital trends.

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