The solid fundamentals that the logistics market showed up to Q1 2020 have shifted towards a demand primarily focused on the search for temporary space (from three to nine months) in order to store an overabundance of merchandise brought about by the current market situation. Rents remain stable in most markets. The uncertain circumstances could delay the start of works on some projects, especially in the Madrid market, where several large projects are expected to be incorporated by the end of the year.
The shortage of space for immediate occupancy in some of the country’s major logistics hubs (mainly in Barcelona) could favour turnkey as well as pre-letting transactions in the new developments scheduled for the next 12 months. Meanwhile, due to the need to improve the response capacity and speed up the delivery of orders beyond large cities, new logistics hubs are being created in decentralised locations. This is piquing the interest not only of operators but also of investors.
The tenants of warehouses that have been excluded from the urban planning process will continue to look for new spaces adapted to town planning regulations. Interest has also been identified in grouping together the different locations in the same region into a single large warehouse.
The logistics market is expected to continue to grow, and both operators and retailers will closely follow how e-commerce performs. The Q1 2020 figures in online sales will be positive, but it will be necessary to monitor whether the data going forward continues this trend.
The highly resilient nature of the logistics market has reinforced the interest from investors. They remain active both in core and core+ products, as well as in value added, through new developments and refurbishment of assets in disrepair in order to adapt them to town planning regulations, provided that they meet other criteria of height, location, etc.
