And why Industrial will be the Next Big Thing
I have been in pan European Logistics & Industrial real estate for almost 10 years, and I love it. When I interviewed for my first role specializing in it, my then future manager briefly touched on why it could make a good career. Little did we know… Today, graduates from universities with degrees in real estate choose it as their preferred sector to work in.
And whilst Logistics has been the attractive part which made the sector into a mainstream asset class, clearly boosted by e-commerce as a structural demand driver, I think it’s time to give Industrial a say at the table. And C-19 has powered it.
These facilities are usually located within cities and have a high land value, underpinned by higher alternative use value;
Unimaginable rental growth potential. We have already seen it begin in the biggest cities like London and Paris;
And most importantly, rapidly increasing online sales (think sectors which have grown during C-19 = e-commerce, food, essential goods) will need a more complex web of delivery and return points in cities.
Psst… demand created by online sales is additional to how light industrial facilities are already used, for example for fruit cutting and packaging, car repairs, etc.
Where should the demand go? The sector is already growing into Retail space, and this trend is rapidly spreading across Europe. In fact, the way we use space is becoming increasingly flexible. “Last mile” as a step in the supply chain can be fulfilled from a warehouse, from a light industrial facility or from a retail shop (for example, as a dedicated returns unit for a 3PL). In practice, every city is embracing it slightly differently, to adapt to its road network and also identity. But we can safely agree that the need for Logistics & Industrial space in cities will increase.
The rise of the sector continues, and we can rest assured that both Logistics and Industrial will be valued greatly.
