Logistics sector appraises headwinds, stays optimistic

Although the logistics sector’s reputation as the ultimate ‘safe haven’ asset class has arguably weakened in the face of current macroeconomic headwinds, there is still plenty of optimism surrounding the sector at this year’s Expo Real.

Said Frank Pörschke, CEO of P3 Logistic Parks: ‘It’s true that headwinds have translated into more expensive debt and higher equity ratios for investors in real estate and this is also affecting logistics. But on the occupier side, the asset class is still outperforming. At P3, we are currently enjoying 98% occupancy across the portfolio and we continue to see rental growth. Will this continue forever? I don’t know – but right now the outlook is good.’

Pörschke said that he remained positive about the firm’s pan-European strategy with the majority of markets displaying the same dynamics. ‘Some investors are being more critical of CEE markets due to their geographical vicinity to the Ukraine conflict. In my opinion, that’s wrong. Our head office is in Prague and the Czech Republic remains one of Europe’s strongest occupier markets.’

However, he agreed that political instability was interfering with investment strategies more than ever. ‘We are definitely dealing with more moving parts than we did in the past and that is having an effect on values. Inflation is driving up interest rates.

‘Nevertheless, today’s situation is much better than the Global Financial Crisis. Look at the banking environment – they are better positioned than they used to be and capital ratios are higher. Regulation has contributed to their robustness. I don’t want to tempt fate but we don’t see the banks driving the crisis this time round.’

He added: ‘Cost and availability of debt are always relevant for investors like ourselves, even despite the security that P3 has – we are very stable and have a strong shareholder who is prepared to contribute more capital.’

Jim Hartley, managing director, Northern Europe, at shed specialist Segro, described the mood as one of ‘cautious optimism’ despite the economic turbulence facing delegates active in the industrial and logistics sector.

‘The increasing cost of debt is causing some volatility in the investment market, but the underlying fundamentals remain very strong and occupational demand shows no sign of abating. One of the challenges at the moment is how to deliver modern, sustainable warehouse space to meet this demand, which is one of the topics of conversation this week.’


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