WAREHOUSE EVOLUTION THIS ARTICLE WAS ORIGINALLY WRITTEN BEFORE THE OUTBREAK OF COVID-19 IN IRELAND. WHILE IT MAINLY DEALS WITH TRENDS IN THE IRISH AND EUROPEAN INDUSTRIAL AND LOGISTICS PROPERTY MARKETS, IT WOULD BE REMISS NOT TO ADDRESS THIS SEISMIC EVENT.
W
ith the ESRI now predicting
a
contraction
in
7.1% the
Irish economy this year, it seems certain that property values in all sectors will fall in the short term. The extent of the decline in consumer demand will depend on the level of business closures and job losses. In theory, companies in transport and logistics, pharma, food
supplies,
healthcare
supplies
and
technology should thrive, while many active in or supplying the hospitality, airline, retail and automotive sectors will suffer. The availability of industrial and warehousing space is at a historic low, and a slump in demand may free up units, particularly smaller buildings where occupiers may not be financially resilient. Many developers of larger warehouses who
had
been
expected
to
NEW WAVE OF WAREHOUSES IPUT Dublin Real Estate is developing two warehouse projects, including this one at Aerodrome Business Park in Rathcoole.
commence
online retailing. Another mitigating factor might be that companies increase inventory levels to make
construction of new buildings imminently have
up for volatility in the supply chain. Unfortunately, the only thing we can be sure of at the moment is
paused their plans and, unless there are mass
what we don’t know.
business failures, it is unlikely that supply will said, a fall in consumer demand will impact
Industrial and warehousing trends The e-commerce effect
demand for warehousing generally.
One area of growth in the industrial and logistics property sector that has caught investors’ attention is
With most shops closed and many people
e-commerce or online retail.
working from home, one consequence of this
In June 2019, Blackstone bought a portfolio of US warehouse investment properties for $18.7bn. In
crisis may be to accelerate the adoption of
Europe, it has amassed a warehouse portfolio worth €8bn in a venture with M7 Real Estate, and has
increase dramatically in these larger sizes. That
signalled its intent to grow this. Blackstone believes that the growth in e-commerce is only in its
FEATURE
infancy, and that this will drive significant demand for warehousing and logistics property into the
Kevin McHugh Director, HARVEY, Industrial Property Specialists
Not only is e-commerce disrupting long-established retailing patterns on the high street, but online
20
SURVEYORS JOURNAL Volume 10, Issue 1, Spring 2020
future. retailers require three times as much warehouse/logistics space as traditional ‘bricks and mortar’
