Savills Portugal has announced the results of its study “Portugal Logistics Market: What’s Next?, a report which concluded that the country currently has a logistics stock of 4.4 million sqm, concentrated mainly in the Greater Lisbon and Greater Porto regions.
However, the question arises as to the quality of this stock and its adequacy to the new ESG and sustainability specifications, which raise important discussions about the country's competitiveness and level of attractiveness in this sector.
According to Savills, Portugal has established itself as a destination of choice for investment in the logistics segment, not only because of its strategic location, but also for the quality of its workforce, its highly competitive labor costs and the availability of energy and its costs, which are among the cheapest in Europe.
In fact, the country is among the top 10 in the European Union with the most competitive electricity tariffs per kWh. In 2023, 61% of the electricity consumed in Portugal came from renewable sources.
Additionally, Portugal is the second most attractive global destination for applying a nearshoring strategy, to which factors such as economic resilience, the aforementioned competitive labor costs, business environment and commitment to meeting ESG targets are also added.
Segment recorded take-up of 470,000 sqm in 2023
In 2023, the industrial & logistics segment recorded a take-up of 470,000 sqm. However, the investment market has not yet kept pace with the growth seen in the logistics occupation market, creating a challenging scenario, the consultancy points out. With demand exceeding supply and the pipeline still available at around 320,000 sqm, the challenge now lies not just in the shortage, but in the quality of the stock.
According to Savills' analysis of the national logistics stock, about 43% of the stock is classified as grade C or below and that scenario will worsen until 2026. By 2026, 66% of the logistics stock will be in the "C" grade, due to the long construction time and a serious lack of available space, which will not constitute an adequate offer for the end customer.
It should be noted that the average occupancy rate over the last three years suggests that the available supply will be fully occupied within a year.
Pedro Figueiras, Head of I&L at Savills, points out that "the pipeline we have is the largest of the last 15 years and already has an occupancy rate of 60%, in a market that doesn't have a pre-let culture. Bearing in mind that only 1/5 of the assets in Portugal are really efficient, from an occupational perspective it is vital that quality supply reaches the market for our development as a logistics hub. From an investment perspective, it's a huge opportunity to re-qualify and develop the national stock".
Tiago Cortez, Capital Markets Associate at Savills, stresses that "our country was one of the first to set the goal of decarbonization, which demonstrates a clear commitment to sustainability. We are probably one of the most competitive countries in the world in terms of workforce, ESG compliance, along with industrial costs below the European average, with energy being mostly produced from renewable energies. However, it is necessary to 'sell' our country better".
For her part, Alexandra Portugal Gomes, Head of Research at Savills, says that "Portugal is strategically positioning itself to be perceived as one of the leaders in the European logistics market. The combination of a skilled workforce, a strong commitment to sustainability and a privileged location puts the country in a prime position to attract significant investment. However, it is crucial that our logistics stock is rethought in order to keep up with demand and maintain the country's competitiveness".
