In this post, Paul Chases, a partner in the HSF London Real Estate team comments on his experience of the Shedmasters event at the MIPIM real estate conference, and on the direction of travel of parts of the real estate industry.
The popularity of this year's Shedmasters event at MIPIM (sponsored by Savills, Gazeley and Prologis, amongst others) is testament to the ongoing strength of the logistics sector, which, in 2017, saw record highs for investment in the industrial and distribution sector. The general view seems to be that this trend is likely to continue for 2018 and beyond with returns for the industrial and logistics sectors predicted to outperform those for office and retail (for example) over the next five years. Already this year, HSF has acted on a number of logistics deals. With such positive forecasts, the expectation is that new investor entrants will look to enter the market and there will be further consolidation by those already involved in the sector.
One of the most noticeable features of MIPIM this year (and openly discussed at Shedmasters) is the growing presence of real estate tech. The logistics sector is a notable target of many real estate tech start-ups and increasing automation of the logistics chain looks likely to continue over the coming years. These technological advances have impacts on the warehouses of the future in terms of space layout, workforce requirements and occupier demand for bespoke fit outs. As these technologies develop, it is likely that occupier priorities in a "shed" will change significantly and owners will have to adapt to such shifts in the sector in order to attract tenants.
It was impossible to escape Brexit discussion at Shedmasters as the logistics sector is likely to be impacted by the type of trade deal that the UK ends up with. Nonetheless, it appears there is a cautious optimism amongst many that the logistics sector should not fare any worse than other sectors as a result of Brexit. It remains unlikely that logistics firms will be able to service the UK from Europe, irrespective of the form of trade deal, and therefore the feeling is that logistics in terms of real estate should remain unaffected. For the moment, it is difficult to speculate on the true impact of Brexit on the sector, but we expect that MIPIM (and indeed Shedmasters) next year will be dominated (for better or worse) by the impending March 2019 Brexit date.
We have a HSF team attending the MIPIM conference this year, including lawyers from our London office, and from our French, German, Spanish and Australian offices. Please contact us for more details.
Author: Paul Chases, Partner and Head of Corporate Real Estate, London
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