22 February, Milano Finanza
E-commerce is currently the fastest-growing sector in Italy, with positive consequences on the logistics and transport industry. Concerning real estate, the growth of the related asset classes is an indicator of this trend, for logistics is one of the most dynamic segments.
The report by the consulting company Jones Lang Lasalle in the last quarter of 2018 shows a growing activity of the warehouse segment, registering record investments. “2018 was an important year for logistics, which is the most dynamic segment of real estate, despite the decreasing absorption rate (-13% from 2017 for a total of 1.5 million Sq m and 94 transactions). Logistics, however, represents a significant part of the market, having grown by 22% in the last five years”, reads the report.
The performance is mainly driven by Third-Party Logistics or 3PL (42%) and by the city of Milan (64%). The past year also saw the acceleration in the completion of operations which have reached 1.1 million Sq m, growing by 18% from the previous year. As a result, rents have increased mainly in Milan, Rome, Bologna and Veneto.
In 2018 the industry recorded total investments for 1.1 billion, reporting a 40% growth, the best result of all times we exclude 2017 which saw the closing of a large operation by Logicor Group. The market has become increasingly international. International investors (especially Europeans) completed 23 of the 24 transactions that started in the previous year.
The real estate report by the consulting company World Capital Real Estate also showed the growth of the logistics real estate market in the second half of 2018. According to the report, thanks to the rise of e-commerce, companies have been looking for spaces with surfaces larger than 5 thousand Sq m. Lucia Dattola from World Capital research division explains that “e-commerce represents a great impulse for the domestic logistics real estate sector, especially for what concerns new properties. Not only new construction has grown, but also the average duration of negotiations has reduced, as only 11% of the negotiations take longer than 12 months. The discounts are generally comprised between 10% and 20%”.
In the second part of 2018, the real estate market continued the positive trend also concerning gross returns. Bologna (6.3-7.2%), Rome (6.2-7.2%), Verona (6.4-7.2%), Genoa (6.5-7.2%), Piacenza (6.5-7.4%) and Catania (6.8-7.8%) reported good performances. Milan’s prime area registered lower values with gross returns set around 6% for new construction, although the interest of companies in this location remains high.
According to the Real Estate Market Outlook by Cbre, logistics will be the key segment in 2019, while the Italian real estate market will grow further. According to the investors surveyed, the biggest challenges for the Italian real estate market in 2019 the asset availability, the cost of properties and the political instability (which has gone from 8% to 14%).
The report also states that “the logistics property market lacks quality assets. Companies can’t find suitable assets, and investors’ needs are being met. The renewed interest for speculative developments is nothing surprising”. The focus is on established locations, for which the demand remains strong. The preference is for large properties (30-50 thousand Sq m). Meanwhile, yields are reducing.
Source: Milano Finanza
Translator: Cristina Ambrosi