2021 Was the year of plenty for Light Industrial & Logistics

Since the pandemic hit the world, we’ve seen major shifts across every sector, some went from bad to worse, others acted fast and were able to reinvent themselves in order to stay in business. But the Light Industrial and Logistics bloomed during the crisis in spite of the challenges that were faced, such as the shortage in supply chains, changes in consumer behaviour and the sanitary restrictions.

During the opening session of our last Industrial and Logistics event, a diverse panel of experts in the sector discussed insights, trends and strategies to advance new partnerships and to find value in these asset classes. 

As the moderator, Paul Graham, Chairman of Gramercy Property Trust, asked them to share their sentiments, Nick Cook, president of GLP summarised the overall positive result by saying they were all “fortunate and relentless”. Other sectors of real estate, like hospitality, were not so lucky and didn’t share the trend, which caused Investors everywhere to divert capital to the logistics sector.

As far as the challenges they have encountered, they all agreed vacancy rates and scarcity of land are a concern, in addition to speculative development. When asked if speculative developments have been rewarded in some locations, Cook confirmed by saying there’s a “healthy amount of discipline amongst the developers community” and went on to say that in Germany, “everything built on spec is leased”, reassuring the audience that the amount of these developments are within acceptable levels.

Moving on to ESG initiatives as the whole world faces consequences of climate change, Carl Deppisch, Global Head Real Estate at Kuehne & Nagel, talks about striving to achieve carbon neutrality for suppliers and customers by 2030 as the company is already carbon neutral in scopes 1 and 2 of the GHG Protocol.

ESG initiatives in the Logistics sector: what to expect?

In a session dedicated to ESG, Steven Pringle, Director and Member Relations at GRESB, addressed how the covid crisis accelerated changes by giving “a sense of how vulnerable we are as a society and how much a crisis can impact our day to day lives and our businesses”.

The panel discussed how difficult it is to preserve the E when dealing with a real estate product, where a building stays in a place for a long period of time and for that matter it must be designed in a way that creates minimum impact, foreseeing the use and impact of that construction 5, 10 years ahead.

Sara Jane Viereck, VP, Portfolio Management, Head ESG Europe at Prologis talked about the S and how health and wellness is becoming more a part of their core business and some of the initiatives they’ve implemented, such as increase in green spaces, green transportation and improving the overall work environment. 

Supporting that, Natali Cooper, Head of Portfolio & Asset Management Europe and Managing Director of CEE at GLP confirmed that “a nice work environment is actually helping productivity and reducing absenteeism” and it helps them to retain talents, a major challenge in the sector.

The impact of ESG on e-commerce operations

The expansion of e-commerce in Europe was another essential session and, as the moderator, Sylvia Slaughter, Senior Director of GLP concluded “the global pandemic has forever altered the logistics real estate landscape”.

Some of the most relevant discussions that took place in the session were about co-sharing economy and last mile issues that surged in the beginning of the pandemic, with Uber drivers delivering Amazon packages to solve an urgent problem when every store had to close its doors. But, as Ekaterina Avdonina, Co-Founder & CEO of Mirastar explained, now that the pandemic is somewhat under control, in a city like London there’s also the issue of the traffic and sustainability of the delivery.

It’s not a simple issue to tackle and there are too many non real estate factors that have to go into account on top of delivering under a time frame. Joseph Ghazal, CIO of Prologis said we have to anticipate “what cities are going to look like in 2025, 2030” and questions if cars will still be allowed. He goes on to say that online operations are “much less carbon emitting than retail, by 30-40%”.

Lastly they shared their views on cold storage properties that are becoming more and more flavour of the day and along with fulfilment centres, are believed to be the best product of supply chain to invest on.

If you want to be part of important discussions regarding the real estate market in Europe, sign up to participate in our upcoming events, both online and in person. Apply for a membership and access the largest real estate and infrastructure community.

By Roberta Gomes, GRI Club