In a year in which the total volume of investment in commercial real estate in Europe fell by 51%, the Industrial & Logistics sector was one of the sectors with the sharpest falls, only surpassed by the hotel and retail sectors.
According to the WMarket 2023-2024, released in advance by Worx Real Estate Consultants, the Industrial & Logistics sector is expected to be one of the most dynamic markets in 2024, with an increase in occupancy levels driven by some tenants moving to new premises and accompanied by a slight increase in rents.
According to the report on the European context published by BNP Paribas Real Estate, Worx's partner in the BNP PARIBAS Real Estate Alliance Network, in European terms there has also been a significant decline in the occupancy market, across all the main markets. Even so, Lisbon was one of the European cities in which the negative impact of the sector was least significant.
The main European markets recorded increases in prime rent, with Lisbon showing the third highest growth, at around 18% (5€/sqm/month). Even so, in Portugal the absorption level of the sector in 2023 was 410,240 sqm, showing a 20% drop compared to the same period of the previous year.
Last year, demand showed a greater appetite for new industrial and logistics spaces whose transactions accounted for more than half of last year's operations. Worx also highlights the growing weight of owner-occupied operations, which accounted for 47% of the total area absorbed. The Greater Lisbon region accounted for more than 40% of the total area absorbed, followed by Greater Porto, where demand for the Santo Tirso area stands out.
More than 28 projects planned or under construction
Faced with a lack of product to meet new demand requirements, investment in new projects has been growing, especially in the Greater Lisbon, Greater Porto and Alentejo areas. In this context, there are more than 28 projects planned or under construction, nine of which are due to be completed in 2024 and which represent a total of 108 hectares of total construction area in the industrial and logistics stock.
According to the consultant, despite the volume of the pipeline and the significant increase in stock, there shouldn't be a significant change in the availability rate, given that a large part of this additional area is already pre-let.
The continued growth in the penetration of online commerce that is expected in the coming years should continue to boost the promotion of new logistics projects, especially in the area of last mile space. The sector's low vacancy rate, coupled with the entry of these new products onto the market, should continue to drive rental growth this year, says Worx. At the same time, the reduction in interest rates should help attract investment to promote new projects.