The rise of ecommerce unleashes the fever of real estate investment in logistics

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This article was written and published in Spanish and has been translated into English via Google Translate. Click here to read the original article.

Blackstone breaks records with an operation centered on a niche with a lot of travel in Spain

The New York Blackstone fund has just starred in the USA with what is considered the largest private purchase in history in the real estate sector (18,400 million dollars) and it has done so in the logistics part, traditionally considered the "ugly duckling" in this area.

The rise of "ecommerce", with the pull of brands like Amazon, has brought many changes in the market, including the greater use of warehouses and warehouses. The phenomenon is not foreign to Spain. According to the data collected in the last report of the real estate consultancy CBRE, in 2018 there was a logistics contracting around 1.9 million square meters, representing an increase of 16% over the previous year and the volume of investment reached 1,500 million euros. The high profitability in a context of ultra-expansive monetary policy have contributed to trigger interest in these assets.

"The logistics contracting of ecommerce is very high in general terms and this trend will increase. In Spain, electronic commerce represents 4% when in other countries it exceeds 12%. There is room to grow and it will have an effect on logistics," Alberto Larrazabal, National Director of Industry and Logistics at CBRE Research, tells ABC. "The change began to be noticed in 2014-2015, with the boom of ecommerce and real estate investments went to the logistics side. The big investors already have in their portfolios ships," he adds. Two types of ship stand out: the big ones, "that are outside the city and that are around 50,000 square meters", and the smaller ones, "closest to the city that deals with the distribution of the packages".

As highlighted by Miquel Serracanta, Director of the Supply Chain Master of EAE Business School, this increase in ecommerce brought the platform construction pump associated and "now there is more interest in investing and having a return". Companies like Amazon have generated "a higher level of quality demand and the ships that are more good are also more expensive". It also points out a duality in the market since new and well-equipped spaces coexist with "old ships, which are less valued and which come down in price".

Serracanta points out five factors that give value to the ships. First, the location and access to rapid communication channels. "The last mile is the most expensive and it should be close to the center of the city," he says. Then the number of docks for loading and unloading, "that allows you to be simultaneous and not sequential, is something fundamental to be faster." Third, the ship itself, "the more diaphanous the better, and with square or rectangular shapes." Size is another factor to consider, "now they look for smaller but better connected". And in fifth place the height in meters, «depending on the product that you must download».

According to BNP Paribas Real Estate, the contracting of logistics spaces in Madrid in the first quarter of 2019 was 73,708 m2 in nine operations. The average and prime rents are maintained compared to the previous quarter at levels of € 4.4 / m2 / month and € 6.2 / m2 / month respectively. "Madrid and Barcelona are the two cities that concentrate the main logistics operations in the country. However, Valencia, Zaragoza, Vitoria and Seville also have a wide logistical concentration, due above all to the logistics activities related to consumption, raw materials and finished products," says Jean-Bernard Gaudin, National Director of the company. Industrial & Logistics of BPN Paribas Real Estate. "The most valued are the latest generation logistics ships, for their technical advantages and location," he says. It also states that the evolution of rental prices "depends on the activities and the local, regional and national logistic arcs". In his opinion, investors specialized in logistics are joining new investors seeking to diversify risk and "take the opportunity to position themselves in a real estate sector that enjoys good prospects for the future."

This article was written and published in Spanish and has been translated into English via Google Translate. Click here to read the original article.

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Acerca de Lucas Vargas:

  • Empezó en Grupo ZAP como el VP de Sales y en 2016 cuando la empresa tenía 60 empleados. Fue nombrado COO de VivaReal tomando el mando de Brian Requarth el Co-Fundador. VivaReal lanzó en Colombia y se trasladó a Brasil. En 2017 se hizo CEO del Grupo ZAP.
  • Ha trabajado en Mexico en PWC y en el Banco Santander
  • Tiene un Master de Business Administration de Harvard
  • En noviembre este año después de la fusión de OLX Brasil y Grupo ZAP fue nombrado el CEO del OLX Business Unit. Lidera la empresa junto con Andries Oudshoorn y Marcos Leite
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Simon Baker is the Founder and Executive Chairman of Online Marketplaces and Property Portal Watch. Involved with property portals for 15 years, he’s a well-recognized expert and industry consultant.
As former CEO/MD of the REA Group for 8 years, Simon led the group to its current market-leading position. When he joined REA Group in 2001, it had $4m in revenues, $6m in losses and an $8m market cap.
By 2008, the company presided over $155m in revenues, $35m in EBITDA and enjoyed a peak market cap of $1b. Simon is currently Chairman of the Mitula Group and Real Estate Investar and a serial portal founder and, investor.