Logistics as a vital sector

In line with the latest government announcements regarding containment policy, more and more players in the logistics industry are taking health measures such as teleworking, cancelling physical meetings in favour of video conferencing, or electronic signatures, for example. And containment leads to a slowdown in rental transactions. " The logistics sector is being hit by a very sharp decline in activity in general and for a simple reason: the impossibility for players in the sector to visit sites makes it difficult to rent space or to sell it. Real estate is a physical business, because goods are physical," says Laurent Sabatucci, Associate Director of EOL.

On the developers' side, most building starts have been delayed and the availability of construction finance has decreased. Prologis observes in a study published on the subject that "the trend is more pronounced for speculative projects than for custom-built projects or work on programmes already underway. In the areas most affected by the epidemic, they have slowed down due to work restrictions and a pause in inspections in some municipalities". Many actors such as Argan or EOL have even chosen to stop construction altogether. " However, while for developers of logistics buildings, this health crisis has led to an unprecedented legal situation, from a contractual point of view, few dossiers have been called into question, both on the investment market and on the logistics market. investment market as well as the logistics market, even when the construction sites have not yet started", underlines Laurent Sabatucci.

An activity that continues

Despite everything, the sector is far from being at a standstill. Even if some shops have closed or are running at a slower pace, the logistics platforms have remained in operation, proof of the strategic importance of the sector. " We are more than ever mobilised to be able to deliver the foodstuffs needed to feed the population to shops and supermarkets every day, " emphasises the Stef Group in a press release. "We are indeed seeing slowdowns or suspensions of activity for non-essential goods, with, at the same time, postponements of activities for essential products and growing demand in the e-commerce sector. This situation is forcing us to constantly adapt, and in particular to be able to offer our customers additional space to help them This situation forces us to adapt constantly, and in particular to be able to offer additional space to our customers to help them manage this increase in activity on essential goods and e-commerce," says Fabrice Cervoni, senior vice-president and general manager for Southern Europe at Gazeley.

The rush to food stores, for example, has obviously had an impact on logistics. " This has led to an increase in activity for food platforms, with recourse to Sunday and night work. We need to be reassured because, according to our customers, there is no shortage, so the logistics chain continues to function well," says Barjane. E-tailers are also very active with online demand having risen sharply since the start of the lockdown, creating a temporary need for additional space. " However, it is not yet clear how logistics will be able to rent space," says Laurent Sabatucci.

Logistics, a "vital sector

As a collateral effect of this unprecedented situation, logistics could well benefit from a better image as the crisis comes to an end. Often decried by local elected officials and neighbours for its lack of glamour, the sector is now at the heart of the "war" against Covid-19 announced by the President of the Republic. "This crisis is changing the viewpoint of consumers and elected officials. It makes logistics a nerve centre of economic activity, because we can do without certain shops, but not warehouses", as Laurent Sabatucci explains. " This, combined with the rise of e-commerce, leads me to believe that logistics will continue to progress from the end of 2020, " he anticipates.

Fabrice Cervoni, from Gazeley, also thinks that "this crisis will highlight logistics as an essential element of the primary infrastructure of any country, which is, once again, positive in the long term for our sector. They are joined on this point by the management of Barjane, which is also banking on " a global awareness, the importance of reindustrialisation or the relocation of strategic activities on national territory. That is to say, re-importing production tools to France and deploying a logistical network that would allow the supply of all French population basins. This would accentuate the need for logistics real estate and would represent an opportunity for the sector at the end of the crisis. When he looks ahead, Fabrice Cervoni also imagines changes in strategies that will benefit the sector. "In addition to the dynamics of e-commerce, which strongly benefits our sector, it is very likely that many players will reconsider the implications of the global supply chain and certainly question short-termist strategies (which can be very costly).strategies (which can be very dangerous in a crisis) in favour of holding more stock to ensure better business continuity, both in the short and long term. If confirmed, this approach can only be beneficial for logistics real estate, " he concludes.

However, according to Laurent Sabatucci: "The fall in take-up and consumption will surely have an impact on the stock of available supply in a few months. But the current vacancy rate is so low, or even non-existent in certain locations such as Lyon and Marseille, that the impact on the price of logistics assets should be minimal. Perhaps white goods and areas like Haut-de-France, where many projects have been launched recently, will be more sensitive. But logistics, despite this incredible situation, remains an asset that is essential to the economy. We can therefore discuss its pricing, but not its interest. Finally, it is likely that many players will seek to increase stock levels and therefore warehouse demand to cope with new supply chain risks. "

" Risk management measures can improve the ability to cope with the unexpected" , Caroline Ceccaldi, Director of Logistics and Client Care Consulting, CBRE

"One of the first lessons of this crisis for the groups we deal with is the need to undertake a transformation of their large global supply chains, which are too interdependent on the Asian (global?) factory. We anticipate a rebound from the crisis during which companies will call on their advisors to modify their organisations by deploying risk management measures to improve their ability to cope with the unexpected. Regaining flexibility, agility and robustness could mean bringing production back to Europe, and thus a supply chain closer to the consumer. In the midst of the crisis, the food and retail sectors are giving new visibility to logistics, the backbone of our economies. As for e-commerce, all consumers now perceive it as a relay and a complement to shops. It should continue to develop in the coming months, notwithstanding the crisis. "

Source: Logistics News, Business Immo
Date : 26 March 2020
Link: https: //www.businessimmo.com/contents/117663/la-logistique-secteur-vital-1