España GRI 2022 will address supply and demand in the Logistics sector

March 22, 2022Real Estate
Juan José Vera, GRI member from Spain and Managing Director at Montepino Logistica, has recently been confirmed as a co-chair at the España GRI 2022, our main in person event which will take place May 10th and 11th, in Madrid at Hotel Wellington. 

Vera will present the Light Industrial and Logistics session and contribute with discussions around the sector along with Private Equity Investors, Fund Managers, LP’s Developers, Asset Owners, Operators and Lenders from all over Europe.

How logistics became a core asset class

“Logistics is core in almost all businesses”. In a recent interview, Vera talked about how there has always been a huge gap between logistics and other types of assets like offices or retail and up until the covid crisis, were considered a lower class asset. Once the pandemic hit, and every store, mall, school, office and restaurant closed, logistics began to be perceived as core, as it should.

That was when investors started to pay attention to logistics and, according to Vera, this “is not a passing fad, and it won’t change anytime soon” and to those questioning the existence of a bubble, he went on to say “we believe that logistics prices are not in a bubble and that they are going to be able to be maintained over time”.

What does a logistic asset need to have today to attract investment?

When questioned if logistics assets are aligned with logistics needs of today, Vera explained that there are two types of logistics assets: old ones and modern ones. Those developed no longer than 5 years ago, the modern ones, are more aligned with the sector’s needs. On the other hand, old buildings from the early 2000s are “absolutely obsolete”, and that is worrisome since that’s the majority of the Spanish logistics park.

He believes what makes a major difference in logistics needs are ESG requirements. A few years back, “nobody thought about sustainability” and right now “any investor and any user, any tenant needs minimum standards”, and that changes and gets more demanding each year. To adapt old constructions to these new requirements is truly complicated and what developers tend to do the most, because it’s cheaper, is to demolish the whole building down and start again from the ground up.

To make the necessary changes in order to meet minimum sustainability standards for a logistics asset today takes a lot of money and hardly anyone wants to invest, and all the capital tends to go toward robotization. Unless it’s a prime location, very close to capitals, but “these are very, very specific cases”, the exception and not the rule, at all.

The importance of having a global approach to ESG

Montepino, as a company, believes their commitment to sustainability standards should not be restricted to energy consumption, although it’s something they recognize is key in the matter. What Vera and Montepino intend is to take a more global approach to other aspects of ESG that deserve attention as well. 

For instance, Vera said they have been able to provide everyone at their buildings “a window they can look through”. To him, one thing cannot exist without the other. To have an energy efficiency building and no windows in an office a worker spends 8 hours a day at is just not reasonable. Vera concludes his argument by saying the aim is “to ensure that the worker’s experience is equal or better than the customers’”. 

That is what modern logistics strives for, to invest and develop energy efficient buildings that are pleasant places to work as well. “The change is a change of paradigm, it is a change in format, in production format, in format of a relationship with the worker.”

Check out Juan Vera's full interview:

Written by: Roberta Gomes