Pandemic has made logistics real estate attractive for investors

Online shopping leaves lower carbon footprint than in-store trips.

Teh formet Prologis Park Nitra.Teh formet Prologis Park Nitra. (Source: Courtesy of Prologis)

While logistics real estate used to be less attractive compared to retail or office sectors, the Covid-19 pandemic and subsequent lockdowns accompanied by a surge of online shopping has increased demand for logistics real estate. Paired with the lower carbon footprint from e-commerce compared to in-store trips, this makes logistics real estate a highly desirable investment instrument.

The Slovak Spectator spoke with Martin Baláž, country manager for Czech Republic and Slovakia at Prologis, a major logistics real estate developer operating in Slovakia, about the impacts of the pandemic on the logistics real estate market, the environment impact of the last mile and more.

The Slovak Spectator (TSS): What impact has the Covid-19 pandemic itself had on the logistics and industrial real estate segment in Slovakia?

Related articleCOVID-19 pandemic accelerating new trends in the logistics sector Read more 

Martin Baláž (MB): When the first wave of the pandemic hit Slovakia and the country locked down last March, we, similarly to other companies in other sectors, did not know how the situation would unfold. We halted all our projects and switched to waiting mode. In the summer, we realised that the pandemic and the consequential lockdown had increased interest in logistics real estate. This was caused by the rising demand of e-commerce companies and retail companies responding to the surge in online shopping, as well as industrial companies. The latter realised that they cannot remain dependent on supplies from other continents, not only China but also the US and others, and began to increase their stocks. This subsequently increased demand for logistics real estate. This development is in line with a Prologis’s study in the US. It indicates that if the stocks of companies using our logistics premises increases by some 10 percent, this results in demand for about 5 million square metres of logistics premises. The situation in Europe is similar.

In the end, while logistics real estate sector used to be a kind of ugly duckling within the real estate sector compared to the office or retail sector in the past, the pandemic has made of it a highly desirable investment instrument.

TSS: Has the impact of the pandemic in Slovakia differed from other countries?

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