RESEARCH June 2024
Proximity Matters!
Urban industrial & logistics real estate
Real estate markets in Europe are in upheaval, but also on the move. Cyclical challenges are currently dominating market views and the public discussion, but our perspective on the logistics and industrial markets is that they remain supported, indeed enhanced, by strong fundamental drivers.
In the last two years we have published a set of materials on the logistics and industrial markets that include:
1. UK Industrial in need of a makeover
2. European industrial in need of a makeover (too)
3. London industrial, the real deal
We have set out the logic of our approach to the logistics and industrial markets where we conclude that supply and its quality is inadequate and, increasingly, urban proximity matters. With occupiers forced to think more about proximity to the (end) customers this strengthens our theses that occupiers will continue to compete strongly for higher quality, operationally efficient urban sites. We expect rental and capital value growth will be the outcome. With competition for urban land already intense, this fundamental will continue to support logistics and industrial strategies.
In our integrated investment approach, we set out key narratives and the framework for our investigation into Europe’s largest urban industrial and logistics markets. This analysis enables us to reflect on the market resilience of urban centres and the strength of the varying local drivers.
Critically, there are significant ranges across the markets we have covered, and as always, stock selection determined at a local level is key. We do not seek to comment on pricing in this note, rather this framework has been established to enable us to recognise that urban centres differ in terms of size, structure, growth prospects and maturity as investment markets. The mechanism also enables us to think about a classification of markets, such that we can appraise them and target them consistently.
