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Investors and banks continue to rely on logistics real estate – rightly?

Logistics properties have proven themselves. Despite the COVID-19 pandemic, they were able to shine with investors in times of crisis with above-average rents and relatively stable returns.

Especially during the lockdown in March of this year, the systemic relevance of logistics, which could ensure the basic supply of the population, became clear. The increasing market share of online trading gave the industry a further boost.

Logistics properties are considered to be low-risk

As Prof. Dr. Tobias Just, Managing Director of the IREBS Real Estate Academy, citing the IREBS “German Debt Project” study at “Haufe”, banks are currently classifying not only residential properties but also logistics properties as particularly low-risk. The study’s press release shows that logistics and housing finance were “the great anchors of stability in the crisis” for the banks. In this segment, the banks tended to expand their financing – in stark contrast to the financing of hotel and non-food retailers, whose financing was severely restricted.

Prof. Dr. According to Just, two structural factors in particular speak in favor of the upswing in the logistics industry. On the one hand, the change in the retail world requires more space for online retailers. On the other hand, the ever increasing international division of labor can only function if the goods can be moved from one place to another without any problems.

Internal logistics benefiting from the COVID-19 pandemic

However, the COVID-19 pandemic has, according to Prof. Dr. Just pointed out which weaknesses an international just-in-time economy that relies on frictionlessness brings with it. He sees the problem here as a kind of butterfly effect: the smallest problems at previous points in the supply chain can later lead to major difficulties. “Important processes must not be fragile,” says Prof. Dr. Just. Inland logistics in particular could benefit from this in the form of, for example, transhipment and distribution centers or warehouses close to the city – presumably at the expense of the large distribution centers at ports and airports. On-site buffer stores for, among other things, critical intermediate products also require additional storage capacities. According to Prof. Dr. The development will “have a strengthening rather than a weakening effect on German logistics demand”.

Growing demand for logistics space

This coincides with the results of the study “Logistics and Real Estate 2020” by Bulwiengesa, according to which the completed logistics area in the past year 2019 reached a new record of 4.9 million square meters. The analysis company of the real estate industry expects a new logistics area of ​​5.3 million square meters for this year and thus another new record, which again trumps last year’s. By 2030, the need for new construction is expected to increase to 6.5 to 7 million square meters annually – far more than the available space allows.

Image sources: Rudmer Zwerver / Shutterstock.com

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