Logistics assets, high rents boost purchasing

Italian logistics is again betting on buying rather than renting. At least, the trend is growing. "The rents of industrial and logistics warehouses, plants and factories will continue to grow," explained Faustino Musicco, head of logistics, last mile & data centres at Colliers. Because the demand for new or renovated facilities - with solar panels, energy efficient and digitised - is very high and the supply, the product on the market, structurally lacking. Therefore, rents will continue to rise. That is why, many customers, who had opted for renting, are returning to buy land and build their own facilities'.

As illustrated by the latest '2024 Report on the Logistics Real Estate Market', presented yesterday in Milan by Scenari Immobiliari, in collaboration with Sfre, in 2023 in Italy the real estate sector was the one on which the largest investments were concentrated, with over €1.7 billion, or 26% of the total. A 41% drop - in line with Europe's 43% drop - due to the rise in rates and geopolitical uncertainty that held back investment last year. Yet this first quarter of 2024 is already looking encouraging, with investments up 16% compared to the same period in 2023, while waiting for the ECB to cut rates and make 'leverage' accessible again.

"Volumes will grow again in 2024," Musicco further explains, "but if until last year the interest was in transactions of new properties, the so-called Grade A properties, already in line with the ESG criteria, today we see a renewed interest in transactions of lesser value and less square metres, old properties to be converted and relaunched.

'European logistics demand is structural,' adds Marco Grassidonio, Country head Italy of Garbe - . The vacancy of new properties, especially in Italy, Germany, the Netherlands and the Czech Republic is below 2 per cent. As soon as the cost of money comes down, all those phenomena such as the shortening of supply chains, the regionalisation of supply chains and warehouses, and the reshoring of production will produce a demand for space that will not be there because, in the meantime, the cost of money has held back new developments'.

"On the other hand," noted Federico Soffietti, managing director investments of Hines Italia, "if rents of between 55 and 60 euro per square metre and yields of 6% lead to revenues of around 900 euro per square metre, between high capex values, ancillary costs and land, costs also reach 900 euro per square metre. This nullifies the profit margin of a 'core' investor and leaves room only for the more opportunistic and aggressive ones'. The ECB's rate cut and a stabilisation of the international geopolitical picture, which in the Middle East also means stabilisation of commodity routes, are therefore expected.