Logistics Real Estate: Growth and Investment Trends

For a long time, logistics real estate did not attract much attention in the real estate and investment markets. However, in recent years, this situation has changed radically. Demand for these commercial properties has never been higher. This trend is linked to several factors, including the rapid growth of e-commerce, globalisation and the need to make supply chains more efficient. Today, logistics real estate has become an essential and attractive sector for investors.

Logistics real estate encompasses various types of buildings, each with specific functions:

Ten years ago, investments in logistics real estate were far from being among the most attractive sectors. In Germany, for example, they accounted for only 6.6% of total commercial real estate transactions in 2013. Today, these investments rank second, accounting for around 24% of commercial real estate transaction volume. The sector is now a prime playground for investors, thanks to strong demand and attractive returns.

Open-ended real estate funds and special funds have become the main buyers of logistics real estate, followed by asset and fund managers. In 2023, although higher financing costs affected returns, logistics real estate remains a robust sector, with initial net returns ranging from 4.1% to 5.7% depending on the location and position of the assets.

The increase in demand for logistics real estate can be explained by several key factors:

• High division of labour: Manufacturing companies are reducing their inventories by adopting just-in-time (JIT) delivery systems.
• Globalisation: Globalisation and the increased interconnection of economies require smooth and fast logistics.
• Growth of e-commerce: The rise of e-commerce is one of the main drivers of this growing demand for logistics space.

Sustainability is now at the heart of logistics real estate development strategy. Buildings must be environmentally friendly and meet requirements in terms of energy consumption, CO2 emissions and material recycling. In addition, digital solutions are being integrated to optimise the use of resources (energy, water, heating).

Modern logistics properties must be ‘smart’ to support increasing automation and digital logistics requirements. Infrastructure such as automated management systems and high-capacity data connectivity are essential for efficient supply chain management.

With the continued growth of urban areas and the increase in online commerce, last-mile logistics is becoming a major challenge. Solutions include the creation of additional transhipment points or the conversion of old industrial buildings into distribution centres.

The growth outlook for logistics real estate is promising. However, challenges remain, including rising construction costs, a shortage of suitable land, and increasing environmental requirements. The shift towards more sustainable facilities adapted to modern technologies will continue to shape the sector, with a particular focus on reducing carbon footprints and optimising supply chains.

We offer specialised expertise in supporting logistics professionals. Our services include:

• Logistics asset management: We help you secure and optimise the management of your warehouses and other logistics spaces. Logistics investments: We assist you in the structuring and implementation (legal and operational) of your projects to acquire or transform logistics facilities.
• Innovation and Sustainable Solutions: We assist you in integrating new technologies and environmental requirements into the management of your logistics facilities.