Opportunities abound
Trends and challenges impacting on logistics and industrial real estate
Key observations
1
Continuity of trends and challenges
Continued strong pressure on companies to align real estate
portfol...
2
Trends &
Challenges
Driving the logistics and
industrial sectors in the next
3-5 years
3 3
2
The major trends and challenges identified were unsurprising…
3
163%
240%
28%
Top 3 Trends
e-commerce/
multi-channel...
… but are respondents neglecting the next big thing?
4
Changing
customer
demand
17%
New product
introduction
15%
Near-sour...
5
Q. Is current network realignment
in manufacturing and logistics
adequate to sustain companies
competitiveness over
at l...
6
1
Today’s supply chain alignment will sustain operational needs for at
least the next 5 years as current major trends an...
7
Occupational
demand
Business and real estate
strategies and requirements that
will impact future occupational
demand
Continued elevated occupational demand over the next three years
8
Respondents indicating expected change in their logisti...
Pressure to service increasingly demanding customers and to reduce
costs drives occupational decisions
9
65%
Level of cust...
10
38%
Very large
(30,000-50,000 sq m)
32%
Medium sized
(10,000-30,000 sq m)
30%
Small
(below 10,000 sq m)
25%
Mega-sheds
...
Real estate obsolescence is not as big an issue as many market
players fear
11
36%
16%
48%
Required standard of facilities...
Medium term contracts are becoming increasingly the norm
12
Source: JLL 2013 logistics and industrial occupier survey Euro...
13
But what markets will
actually be successful
in attracting future real
estate demand?
High emphasis on cost reduction and customer satisfaction will
favour locations with excellent connectivity …
14
2.1
Reduc...
… in this context, low importance given to multi-modal and
port-centric operations is surprising
15
3.6
Enable modal shift...
16
Q. Do you agree that emphasis on
multi-modality, rail freight and
port-centric logistics will
increase going forward -
...
17
1 Yes, all three will see occupational demand taking-off
significantly over the next few years.
2 Yes, at least one out...
18
Q.
Which of the three locations
are likely to see
the highest occupational
demand?
19
1 Multi-modal sites
2 Major seaports (port-centric logistics)
Sites offering direct rail access
3
20
And how important is
the integration of
sustainability
measures to logistics
and industrial real
estate?
Respondents focus on a narrow set of sustainability measures that
offer the highest immediate potential for cost reduction...
Largely the same sustainability measures will remain the
dominant focus for companies over the next 3 years
22
50%
Heating...
By contrast, companies do not expect to place high importance on
mitigation against climate change driven events over the ...
24
Emerging
markets
High potential to achieve
growth in logistics and
industrial markets drives
corporate interest
The same three growth markets came out on top for both logistics
and industrial
25
High market potential … but
in particul...
COPYRIGHT © JONES LANG LASALLE IP, INC. 2014
Thank you
Alexandra Tornow
Head of EMEA Logistics & Industrial Research
Frank...
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Opportunities abound: trends and challenges impacting on logistics and industrial real estate

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Learn more by visiting http://www.jll.eu/emea/en-gb/logistics-survey

This presentation covers the findings from our survey, undertaken in collaboration with CoreNet Global. We explore which trends and challenges will be the main drivers of real estate demand over the next 3-5 years and how they will impact specific floorspace requirements.

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Opportunities abound: trends and challenges impacting on logistics and industrial real estate

  1. 1. Opportunities abound Trends and challenges impacting on logistics and industrial real estate
  2. 2. Key observations 1 Continuity of trends and challenges Continued strong pressure on companies to align real estate portfolios = continued high levels of occupational demand = significant opportunities for landlords, developers and investors. An intriguing paradox Slow on-take of many trends and challenges experts sustain will have a significant impact on businesses in the future = supply chain alignment not future-proof? Source: JLL 2013 logistics and industrial occupier survey Europe in cooperation with CoreNet Global
  3. 3. 2 Trends & Challenges Driving the logistics and industrial sectors in the next 3-5 years
  4. 4. 3 3 2 The major trends and challenges identified were unsurprising… 3 163% 240% 28% Top 3 Trends e-commerce/ multi-channel retail emerging markets new technology implementation 173% 47% 40% rising transport costs shorter order lead times from customers rising energy costs Top 3 Challenges Source: JLL 2013 logistics and industrial occupier survey Europe in cooperation with CoreNet Global
  5. 5. … but are respondents neglecting the next big thing? 4 Changing customer demand 17% New product introduction 15% Near-sourcing/ re-sourcing 15% Transport collaboration 20% Evolution in maritime transport 15% Increasing urbanization 11% Outsourcing 19% End-user demanding sustainability 11% Urban logistics 22% Increasing customer returns 17% Labour availability 15% Labour costs 17% Aging transport infrastructure 23% Reducing real estate costs 15% Regulatory measures 17% Improving operational efficiency of facilities 15% Rising supply chain risks 26% Supply of land/logistics buildings 15% €   Trends Challenges Source: JLL 2013 logistics and industrial occupier survey Europe in cooperation with CoreNet Global
  6. 6. 5 Q. Is current network realignment in manufacturing and logistics adequate to sustain companies competitiveness over at least the next five years?
  7. 7. 6 1 Today’s supply chain alignment will sustain operational needs for at least the next 5 years as current major trends and challenges will remain the main driving force. 2 There is some risk that a number of trends and challenges could become more significant than currently expected – but this will not impact significantly on network alignment over the next 5 years. There is a significant risk that businesses are missing important trends and challenges. Today’s network alignment is not adequate to remain fully competitive over the next 5 years. 3
  8. 8. 7 Occupational demand Business and real estate strategies and requirements that will impact future occupational demand
  9. 9. Continued elevated occupational demand over the next three years 8 Respondents indicating expected change in their logistics and industrial portfolio occupied over next 3 years Source: JLL 2013 logistics and industrial occupier survey Europe in cooperation with CoreNet Global 65% of companies expect to increase occupied logistics floorspace 36% of companies expect to increase occupied industrial floorspace
  10. 10. Pressure to service increasingly demanding customers and to reduce costs drives occupational decisions 9 65% Level of customer demand 57% Improving customer service 37% Service growth in online retail 37% Reduce overall occupancy costs Source: JLL 2013 logistics and industrial occupier survey Europe in cooperation with CoreNet Global % of respondents indicating their top 3 drivers of change in occupational portfolios over the next three years
  11. 11. 10 38% Very large (30,000-50,000 sq m) 32% Medium sized (10,000-30,000 sq m) 30% Small (below 10,000 sq m) 25% Mega-sheds (above 50,000 sq m) 26% High number of loading doors Source: JLL 2013 logistics and industrial occupier survey Europe in cooperation with CoreNet Global % of respondents indicating their floorspace requirements No size fits all … but big is beautiful
  12. 12. Real estate obsolescence is not as big an issue as many market players fear 11 36% 16% 48% Required standard of facilities Source: JLL 2013 logistics and industrial occupier survey Europe in cooperation with CoreNet Global Standard modern general specifications Build to suit or specific standards Both types are needed
  13. 13. Medium term contracts are becoming increasingly the norm 12 Source: JLL 2013 logistics and industrial occupier survey Europe in cooperation with CoreNet Global Less than 3 years 3-5 years 5-7 years 7-10 years More than 10 years n/a 16% 43% 18% 8% 6% 9%
  14. 14. 13 But what markets will actually be successful in attracting future real estate demand?
  15. 15. High emphasis on cost reduction and customer satisfaction will favour locations with excellent connectivity … 14 2.1 Reduce real estate costs 2.4 Reduce transport costs through location strategy 2.3 Enhance customer service Index from 1 = very important to 5 = less important Source: JLL 2013 logistics and industrial occupier survey Europe in cooperation with CoreNet Global Respondents stating the importance of their company’s business strategy
  16. 16. … in this context, low importance given to multi-modal and port-centric operations is surprising 15 3.6 Enable modal shift locating at a multi-modal site 3.6 Expand floorspace at a major seaport Source: JLL 2013 logistics and industrial occupier survey Europe in cooperation with CoreNet Global A contrast to anecdotal evidence seeing rising corporate interest in multi- modality, rail freight and ‘portcentric’ logistics. Index from 1 = very important to 5 = less important Respondents stating the importance of their company’s business strategy
  17. 17. 16 Q. Do you agree that emphasis on multi-modality, rail freight and port-centric logistics will increase going forward - favouring rising occupational demand across locations providing these attributes?
  18. 18. 17 1 Yes, all three will see occupational demand taking-off significantly over the next few years. 2 Yes, at least one out of the three locations will see rising occupational demand over the next few years. No, none of these locations will gain significant increases in occupational demand over the next few years. 3
  19. 19. 18 Q. Which of the three locations are likely to see the highest occupational demand?
  20. 20. 19 1 Multi-modal sites 2 Major seaports (port-centric logistics) Sites offering direct rail access 3
  21. 21. 20 And how important is the integration of sustainability measures to logistics and industrial real estate?
  22. 22. Respondents focus on a narrow set of sustainability measures that offer the highest immediate potential for cost reduction 21 73% Heating energy reduction 61% Electrical power reduction 55% On-site waste segregation Source: JLL 2013 logistics and industrial occupier survey Europe in cooperation with CoreNet Global % of respondents stating the top 3 sustainability measures implemented in existing real estate portfolios
  23. 23. Largely the same sustainability measures will remain the dominant focus for companies over the next 3 years 22 50% Heating energy reduction 36% Renewable carbon power generation 59% Electrical power reduction Source: JLL 2013 logistics and industrial occupier survey Europe in cooperation with CoreNet Global % of respondents stating the top 3 sustainability measures likely to be integrated in real estate portfolio over the next 3 years
  24. 24. By contrast, companies do not expect to place high importance on mitigation against climate change driven events over the next 3 years 23 16% Overheating mitigation 5% Reinforcements to roof to cope with extreme weather 16% Flood risk prevention 9% Biodiversity enhancement measures Source: JLL 2013 logistics and industrial occupier survey Europe in cooperation with CoreNet Global A limited short-term cost effect? % of respondents stating the top 3 sustainability measures likely to be integrated in real estate portfolio over the next 3 years
  25. 25. 24 Emerging markets High potential to achieve growth in logistics and industrial markets drives corporate interest
  26. 26. The same three growth markets came out on top for both logistics and industrial 25 High market potential … but in particular Russia and Turkey present companies with a range of risks and challenges % logistics / % industrial Source: JLL 2013 logistics and industrial occupier survey Europe in cooperation with CoreNet Global 1 2 3Russia 64% / 41% Turkey 48% / 26% Poland 43% / 24%
  27. 27. COPYRIGHT © JONES LANG LASALLE IP, INC. 2014 Thank you Alexandra Tornow Head of EMEA Logistics & Industrial Research Frankfurt +49 (0)69 2003 1352 alexandra.tornow@eu.jll.com Survey methodology Conducted via online questionnaire and through telephone interviews Over 60 respondents from the logistics and industrial sector located in Europe Survey period: Sep – Dec 2013

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