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Logistics real estate? It’s logical, really.

The real estate industry has been catering to the growing demand for logistics properties for some time now. This trend has been further accelerated by greater mobility and general digitalisation in society. But it was not until the start of the current decade that a real gold fever began to emerge in the market, further heightened by the pandemic. 

I n addition to the major construction projects that have been completed in the logistics real estate sector throughout Switzerland in recent years, various investment vehicles and investment groups have emerged to take advantage of this exciting opportunity. These days, almost every real estate company includes «logistics» at least as an additional use type in their portfolio. Credit Suisse summarised the dynamics at play in its logistics real estate report: «The flow of goods to be handled is enormous and continues to grow at an above-average pace. […] Online trading, urbanization and digitalization are the megatrends characterizing the development of this market.» The fact that this flow of goods has driven demand for corresponding properties in recent years is backed up by figures from a study of the Swiss market. Between 2006 and 2019, the logistics market volume in Switzerland grew continuously by around 2% per year.

Of the 184 or more properties, 9% currently fall into the category of logistics and infrastructure.

Projects in Geneva and Zurich

Swiss Prime Site’s property portfolio currently has a market value of around CHF 12.8 billion. Of the 184 or more properties, 9% currently fall into the category of logistics and infrastructure. Two major projects in this area have been partially completed in the past 24 months and transferred to the portfolio. The West-Log property is dedicated to city logistics. It is located next to the Zurich Altstetten railway station, near a tram line into the city centre and Switzerland’s main motorway, the A1. The first two floors have extra-high ceilings and house various automated storage facilities, retail spaces and showrooms. The upper levels have been designed for use as office space. Like West-Log in Zurich, the Espace Tourbillon development in Geneva is located on the outskirts of the city. The five flexible commercial buildings are ideally suited to high-tech firms, biotechnology, cleantech and R&D companies, as well as commercial, retail and service companies. To meet the current needs of industry, trade and retail, the three underground floors serve as a logistics platform, with infrastructure for lorries and other modes of transport.

According to various studies, logistics will continue to be a rewarding use category for real estate investors in Europe.

Logistics as part of corporate strategy

According to various studies, logistics will continue to be a rewarding category of use for real estate investors in Europe. The coronavirus pandemic has further fuelled the value drivers of globalisation, online retail, mobility and economics, all of which are key factors in the development of logistics and warehouse properties. For example, in globally active industrial companies, logistics management has become an important strategic component which, ideally, can be turned into a competitive advantage. At the same time, the convergence of production and supply processes, combined with increasing automation, is also leading to greater demand for logistics space. The pandemic has seen unprecedented growth in online retail, which has also spread to new product categories. Furthermore, reverse logistics is also becoming more important due to the sharp rise in online shopping. Businesses have to make their returns processes quick and easy for their customers. The location and accessibility of properties are also important criteria, as the most attractive locations are usually those that are easy to reach and access. The economic recovery after the pandemic should give the procyclical logistics sector a further boost.

Use of reserves in the portfolio

In its existing portfolio, Swiss Prime Site Immobilien has many promising properties that meet the criteria for successful logistics hubs. One of these is the Iseli site in Regensdorf. This commercial site near the city of Zurich has an area of around 25 000 m2 and boasts eight multipurpose halls that are home to specialist skilledtrade and service businesses from the construction and engineering sector. The Regensdorf location will become even more attractive in the coming years with the completion of the Bahnhof Nord development zone and the expansion of the Gubrist Tunnel. The site, which is intended for commercial use, has its own rail link and offers considerable potential for logistics and higher density development.

Swiss Prime Site Immobilien believes it is well-equipped for an even more global, highly digitalised and mobile future.

Acquisition of attractive new locations

In early 2020, Swiss Prime Site Immobilien acquired two logistics properties in a central location in the canton of Basel-Land. Proximity to the city of Basel, good accessibility from the A2 and A3 motorways, and nearby border crossings to Germany and France offer attractive conditions and additional development potential. Another logistics property was subsequently purchased in the Zurich region (Buchs). This has an area of around 20 000 m2 and is situated in a logistically important cluster. The most recent significant acquisition in this area was completed in spring 2021. This was a key plot in an easily accessible location, close to the Zurich-Altstetten train station and only a stone’s throw from the existing West-Log property. The warehouse and distribution building perfectly complements the development pipeline in the city of Zurich.

Swiss Prime Site Immobilien believes it is well-equipped for an even more global, highly digitalised and mobile future.

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