Ismail Klement serves as CEO and Vice President of the Merlin Properties real estate group. He is currently in Barcelona to attend the International Logistics Fair (SIL) celebrations. Merlin remains a major listed real estate company on the Spanish stock exchange, and today the focus has shifted toward data centers and logistics platforms. He notes clouds on the horizon and critiques the emphasis on industrial land around Nissan’s Free Zone.
How about the Nissan terrain issue?
The port area of Barcelona has long offered a compelling backdrop for projecting growth and expanding capacity in real estate logistics. Yet for reasons unclear, the preferred path appears to be avoiding that potential. There is a sense of being overlooked in the process.
With competition opening up, have there been positive shifts for logistics?
There is some confusion. A 70,000 square meter surface plan is on the table, with a broader 500,000 square meters potentially available in a short period. Yet the enthusiasm seems muted.
Will half of the land ultimately be allocated to logistics?
The outcome remains uncertain. The Consorci de la Zona Franca (CZFB) has pushed negotiations to the limit and plans to issue a bidding document to secure revenue. Recent talks have revolved around lowering rents, a move CZFB cannot accept. The aim appears to be paying a logistics canon to the industrial segment, tied to PERTE support, risking a subsidized economy.
Reindustrialization…
The term industrialization belongs to earlier eras. Is a production line seen as whiter collar when compared to a logistics warehouse with forklifts? Is logistics blue collar by definition?
CZFB has consistently defended the logistics option, though it has not been a central feature in the reindustrialization discussions. Canon remains a priority. Vía Cilsa, Merlin’s participant in the Nissan competition, will push the case forward. A notable proposal involved a data center infrastructure for Marseille, but it faced dismissal from the table. It was a significant hyperscale project, yet opposition blocked progress. Elements appear to marginalize the project, and the reasons remain unclear. It may surface in the coming years, possibly through formal inquiry by the Prosecutor’s Office. For reasons not fully understood, there is ongoing resistance.
Everything for the industry…
There is a sentiment of bold experimentation. It seems possible to situate industrial facilities nearly anywhere. Building in Montcada or BaixPeneds may not make sense, but in a moment of land scarcity in Barcelona, it becomes a consideration. The motives behind these choices remain puzzling, and there is a reluctance to seek clarity.
Exciting moments in the logistics sector at SIL…
The situation is delicate. A midterm crisis looms. There may already be signs of a supply squeeze that could deviate from market trends, and those who react late may suffer most.
Midterm prospects?
Perhaps three years out. If a project requires five years to mature, some players may face a temporary imbalance or oversupply.
Is it premature to discuss oversupply amid strong logistics momentum?
The signs point to some level of oversupply approaching. Many in the industry resist that view, but the conditions increasingly point in that direction. Insurance providers and investors new to logistics are entering the field. If demand contracts, these players may feel the pinch more than others. In the United States, for example, Amazon’s slower logistics expansion signals that e-commerce penetration is reaching a plateau. Growth slowed from roughly 30–35 percent annually to under 20 percent, and Amazon’s share of the US logistics market hovered around 26 percent.
Are projects slowing down across the board?
Yes. Across the board, companies have paused projects as construction costs rise. That means housing prices can no longer be simply adjusted upward to cover higher costs.
Is the crisis severe?
Oversupply episodes are common in real estate. The prudent response is to ease developments and temper prices to maintain balance.
How does the rate environment look?
Who lends to Spain for a decade at what rate? Uncertainty comes with a price. A reasonable expectation is debt in the 3 to 3.5 percent range, and mortgages likely to hover above 5 percent.
Dramatic, yet not catastrophic.
The perspective should be measured. The crisis of 2008 is not repeating. The leverage in the listed real estate sector in Spain is now around 40 percent, far below previous levels. Rent income stands at 440 million, with debt around 75 million. There is room for calm and steady management.