Companies that own or lease industrial spaces, are counting on eCommerce

Although less impacted by the effects of the Covid-19 epidemics than other real estate sectors, the industrial and logistics market is also adjusting to the new business context.

Therefore, more and more companies are seeking solutions in online, considering that online sales increased for 75% of companies in this period.

In the same time, market players are adopting local or proximity solutions for materials (19%), in order not to depend on imports from distant countries, are restructuring projects and processes (46%) or are even putting some projects on hold (33%), according to a study conducted by Colliers International among 76 industrial & logistics companies in the Romanian market.

About 59% expect rents to decrease in the next 12 months, on the background of slowing down logistic operations.

85% of industrial & logistics companies see their business impacted in the actual context, but 54% consider the effects are minor compared to other markets.

29% say the business is affected by the employees’ absence, 28% by restrictions in delivery, 16% by supply bottlenecks and 13% by a halted production.

Online platforms and a multichannel approach, possible solutions to minimize impact

80% of retailers who responded to the survey say they have online stores or want to invest in such a platform in the near future, counting that it will act as a buffer to the sales decline in physical stores.

The expansion of online sales will take place in a context where all of the companies took precautionary measures such as travel restrictions, increased safety and hygiene measures, work from home, etc.

The highest number of measures were taken by retail players, mainly in terms of restructuring projects or processes. These kinds of measures were also taken by e-commerce players even though for some, depending on the line of business.

Local suppliers to avoid raw materials supply bottlenecks

In the current context, producers will increasingly focus on local solutions for the raw material, in order to no longer depend on imports from more distant countries, such as China, for example, and to avoid supply chain bottlenecks.

Thus, in the next period, the specialists estimate that the local production spaces will experience a significant increase, and even Chinese companies will be interested in developing production centers in Europe, including Romania.

Retail & logistics demand is expected to decrease, reflecting on rents

63% of the respondents see a demand decrease in the next 12 months and 59% believe rents will follow the same trend as a result.

The long-term consequences of the Covid-19 pandemic will most likely be the restructuring of the supply chain, according to 69% of participants to Colliers International’s survey, followed by delays in the flow of goods (59%) and an increase in storage capacity (31%).

Only 10% of industrial and logistics companies believe there will be no major consequences.

The relationship with China, affected

43% of the respondents see a change in thinking in the industrial sector about relations with China regarding imports and warehousing in the EU. 45% think there will be only a short term change and 13% see no change.

It is still too early to judge the impact of the post-pandemic impact on trade relations, but the specialists underscore that a large part of market participants would expect a re-balancing of sorts with regards to China.

For Romania, this could mean the re-shoring of new production facilities for European markets. Similar surveys undertaken by Colliers in neighboring countries yielded similar results, with the majority of Polish I&L players expecting either short-term or long-term opportunities at the expense of China.

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