Publications

- February 1, 2021: Vol. 15, Number 2

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Holding strong: The logistics sector should keep delivering high, stable returns

by Paul Kennedy

The logistics sector is enjoying its moment in the sun, but how long will it bask in the light? Complementary technology trends in occupier and investment markets, accelerated by the crisis, have led to attractive performance. While some believe this may be hard to sustain, we remain optimistic.

On the occupier side, recent rental growth across Europe has exceeded inflation. At the same time, take-up has been strong and vacancy, stable, with accelerating supply-side growth being offset by strong occupier demand. There are good reasons to expect these trends to continue.

Strong demand for logistics space can largely be attributed to the ongoing shift from physical to online retailing. Between 2014 and 2020, ecommerce sales as a share of retail sales in the UK increased from 13.5 percent to over 30 percent. For Europe, the current average is just under 20 percent.

Estimates from Capital Economics suggest that for every £1 billion (€1.1 billion) of growth in onl

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