Investors could be in danger over-emphasising the impact of e-commerce on the logistics sector, delegates at this year鈥檚 Expo Real conference in Munich heard.
With logistics enjoying significant interest from investors, the effect of e-commerce is under constant evaluation. Online retail grew by 16% in Europe last year alone, according to Patrizia Immobilien 鈥� which a logistics business.
Speaking on an Expo Real panel chaired by 麻豆映画 Real Estate editor Richard Lowe, Towers Watson consultant Paul Jayasingha said there is a risk that investors 鈥渙verplay鈥� e-commerce and its influence on rental growth.
Jayasingha said he was yet to see clear evidence that increased market rents are linked to e-commerce, which he said has been on an upward trend for a decade.
Logistics rents, however, have only been rising post-financial crisis, he said, adding that any correlation therefore seems weak.
鈥淭here鈥檚 a bigger link to the general business cycle,鈥� Jayasingha said.
Co-panellist, David Buck, managing director of industrial development, said logistics 鈥� the 鈥渂ackbone of the economy鈥� 鈥� was undergoing significant change.
鈥淭echnical advances and how buildings are equipped are not unique to the logistics sector,鈥� Buck said. 鈥淭he same applies to offices or multifamily 鈥╯ector 鈥� there鈥檚 always the question of obsolescence.鈥�
Europe, he added, can learn from the more advanced US market.
鈥淲hen you consider building design characteristics, there are lessons to be learnt from the US historically,鈥� Buck said, adding that the 鈥渓ess mature鈥� continental Europe currently offers more opportunity than the US.
Prologis head of capital deployment Joseph Ghazal said that, with the logistics sector undergoing an improvement in specifications, e-commerce was not the sector鈥檚 only structural driver.
The firm, he said, was focused on selecting the right locations when investing.
鈥淲e buy for location, not yield,鈥� he said, predicting more yield compression for the sector and a 鈥渟econd wave鈥� of investment.
鈥淭he market has moved in the past two years, but there is still room for cap rates to come in,鈥� he said. 鈥淲e are still nowhere near the peak rents of 10 years ago.鈥�
Jayasingha said Towers Watson is advising clients to adopt a 鈥渕ulti-year plan鈥�.
鈥淲e advise clients to be more selective at this point in the cycle,鈥� he said. 鈥淚t鈥檚 very easy to chase yield and we would rather advise strategies that don鈥檛 overstretch at this point in the cycle.鈥�
