HE International Logistics Fair, held recently in Barcelona, tests the pulse of an industry moving with cautious optimism and solid promise even as clouds gather. A barometer from the consulting firm CBRE, presented at the fair, suggests that 66% of logistics operators expect demand to rise in 2023. In the first quarter, logistics commitments exceeded 690,000 square meters, higher than the five-year quarterly average. Fears of rising prices and scarce space from the previous year have eased, while turnkey deliveries proceed steadily in a more stable economy with cooling inflation.
CBRE’s analysis highlights several headwinds: higher financing costs up 24%, a 19% increase in construction costs, and persistent space shortages at 19%. Yet the picture isn’t all gloom; there is a nuanced growth story that includes a measured decline in investment as a sign of cautious market sentiment.
investment decline
In Spain, the HE logistics investment market closed the first quarter at 293 million euros, down 67% year over year, driven mainly by elevated financing costs after several rate hikes. The CBRE report notes that this downward trajectory is likely to continue, with projections showing second-quarter investment under 100 million euros and full-year 2023 total investment around one billion euros. The trend mirrors a broader European pattern, with total real estate investment down about 65% in the first quarter.
consistent demand
CBRE’s XI Logistics Market Research shows that demand remains steady even as investment cools. Net space contracted in the first quarter, but is up 1.5% year over year and above the five-year average. Logistics centers, warehousing, and 3PL services continued to attract buyers when projects were completed. In the Central Zone, warehousing and distribution spaces represented a solid share of hiring last year, with supermarkets and distribution activities following. Catalonia reported strong demand for integrated logistics services, with transport and distribution and supermarket logistics also driving contracts.
Slower growth of e-commerce
E-commerce activity has cooled in terms of contracting compared to the peak years. In 2020, e-commerce related operations accounted for 43% of Central Region logistics contracts; this figure declined to 23% in 2021 and 12% in 2022, before slightly rebounding in 2022 and later. The overall trend indicates a consolidation of e-commerce, which is expected to maintain space demand growth in the coming years.
GoDaddy recently published an observatory on digitization that analyzes the current state of online commerce for small, globally oriented businesses, including Spain. The survey found that 65% of Spanish entrepreneurs use a website, an online store, or an e-commerce platform as their main sales channel, compared with 61% worldwide. About 37% of small Spanish firms started in the last five years. Nine out of ten Spanish companies have been in the market longer than a year, a higher share than in the US. All these firms typically need a postal, shipping, or logistics contract, or external storage to grow. The same source projects the electronic commerce penetration rate in Spain to reach roughly 14.7% by the end of 2024, marking a notable rise from 4.6% in 2017, a growth accelerated by the pandemic.
trust in demand
Despite market uncertainty, confidence in the logistics sector remains positive with strong demand prospects. Arancha González, Deputy Director of Research at CBRE Spain, notes that 74% of logistics operators expect to invest in the sector in 2023. Technology and sustainability take center stage as crucial priorities. About 86% of operators plan investments in sustainable logistics projects next year, and 13% aim to boost productivity through technology in 2023. The ongoing modernization of the sector has particularly amplified the focus on digital tools.
Even with higher interest rates, logistics, alongside the living economy, continues to attract both financiers and occupiers looking to expand. Carlos García, Senior Director of Industrial and Logistics Investment Properties at CBRE Spain, emphasizes the resilience of the sector. CBRE, based in Dallas, is a NYSE-listed Fortune 500 company with more than 115,000 professionals in over 100 countries, known for its broad consultancy and market intelligence.