Logistics in the face of recession: the resilience shown during Covid as an asset

The logistician does not panic because of the rebound in the price of money. After the last health emergency due to Covid-19 boosted ecommerce and that, in turn, had an impact on the sector entering the Olympus of the real estate (the more than 3,600 million investment in the 2020-2021 period attest to this), the logistics sector faces a possible recession in the economy with respect, but without fear.

The biggest challenges facing logistics in a context of rising money prices and high inflation records focus on the cost of building the assets. On the one hand, the exponential increase in the prices of materials, which has been dragging on since the end of 2021, will continue to impact the margins of developers, who they will also see how the barriers to access to financing increaseespecially for speculative projects.

“Developments at risk are going to decrease as a result of the fact that banking entities will put more conditions on the table when it comes to granting the necessary financing to carry out a project of these characteristics,” says Gustavo Cardozo, CEO of Panattoni in the Iberian Peninsula, which also highlights that, as a result of these conditioning factors, “companies will choose the projects to be carried out very well”.

Javier Mérida, general director of P3 Logistics Parks, highlights that the increase in the price of money “is going to cause new promotions to slow down or even some to be paralyzed”, and warns that “we will find ourselves before a scenario where there will be less supply” . However, he emphasizes that this situation does not have to be bad, “since it will help maintain stability in the activity.”

What is not so worrying is a brake on demand. The availability rates in the first logistics markets in Spain continue to be at a minimum and the sector identifies two important growth levers for the coming years.

On the one handthe relocation of the production of European companies which, to minimize disruptions in the supply chain, move their production centers from Asia or the Middle East to Europe. Also it is expected that ecommerce will continue to exceed records and, although not with the force that drove it during the pandemic, it is expected that a boom in e-commerce figures will also have an impact on greater logistics contracting in the national market.

“The logistics sector is the one that is going to have the greatest stability of all the real estate sectors in a context of recession,” says Alberto Larrazábal, national director of industrial and logistics at CBRE.

“The Spanish market in general is quite obsolete and needs a lot of new and high-quality promotion; It is true that some projects may be affected, more than anything in their profitability; however, today we are not seeing that these projects have been paralyzed, far from it, but that the demand for land and future projects are active”, says Larrazábal, who also foresees that “rents will continue to rise and our estimates are that these will grow more than 13% in the next three years”.

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