Jürgen Winklbauer, Managing Director of Panattoni Austria talked to Property Forum about the current situation in the Austrian warehouse market, the plausible directions of its development and the growing importance of photovoltaics.
Austria occupies a special place on the warehousing map of Europe – its central location at the crossroads of the most important transit routes should give it a significant competitive advantage over other countries in the region. In which regions of Austria do you see the most potential for logistics and logistics real estate?
Austria is a major logistics hub in Europe with East-West and North-South connections, which are important for companies in the logistics and transportation sector. The greatest potential for logistics and logistics real estate lies for Panattoni in the triangle of Linz, Graz and Vienna. Each is close to the borders of other countries that each have an outstanding importance for the international logistics market, such as Germany, the Czech Republic, Slovakia and Hungary. Added to this is the relevance of the metropolitan regions themselves with Vienna as the provincial capital and Graz as the second largest city.
All over Europe, developers are off to the races building city warehouses to serve the e-commerce market. Is it similar in Austria?
The importance of e-commerce is still increasing. According to the 'eCommerce Study Austria 2021', published by the Austrian Trade Association and the platform 'Mail Order, eCommerce & Marketplaces', online shopping increased by more than 20 per cent and reached new record levels in distance trade spending of more than €10 billion. For project developments in the e-commerce sector, urban locations and sites are particularly attractive with their infrastructure, transport connections, and proximity to customers. This also applies to Austria and its conurbations such as Vienna. At the same time, it is important to emphasize that for Panattoni, despite our international vision, the focus always is on local structures. It is thus essential to evaluate which real estate concepts fit the specific local conditions. Especially in the case of the large-scale logistics ‘big boxes’, the municipal framework conditions need to be clarified precisely.
What is the availability of land for new warehousing developments around major cities in Austria? Which areas of Austria outside Vienna do you think will develop the fastest? Graz, Linz or perhaps somewhere else?
The Austrian logistics market has shown great dynamism in recent years, which will continue in the future. According to an analysis by the real estate service provider CBRE, a record number of new projects will be completed in the three most important logistics hotspots Vienna, Graz and Linz by 2024. The stock at the three locations is expected to increase by a total of around 20 per cent. This will also increase the demand for logistics space in the coming years. It is not clear which region will develop faster. At Panattoni, the focus is therefore equally on all of those regions, where we have also planned our first projects.
The war in Ukraine has stalled and is likely to stay with us for longer. Could the constant, smouldering conflict in the region reduce the attractiveness of storage in CEE countries as an investment asset?
No, on the contrary. The importance of logistics as a system-relevant economic sector continues to grow. We have already been able to observe this in the case of COVID-19. Maintaining international supply chains is of great importance for companies and whole national economies. Already during the pandemic, we have seen that many companies and service providers want to make their supply chains more resilient. Importantly, this includes the use of storage space to be able to stockpile goods and ensure secure production. The conflict in Ukraine further reinforces this trend, so logistics real estate is becoming increasingly important. This makes them attractive as an asset class for investors.
Rising energy commodity prices will probably translate into even greater demand for the use of photovoltaic panels on the roofs of warehouse facilities. What is the importance of photovoltaics at Panattoni?
Due to the increasingly noticeable effects of climate change, the importance of sustainable energy supply concepts has been growing in the industry for some time. This also applies to Panattoni. The Ukraine conflict is further intensifying demand. With its leading role in the European market, Panattoni wants to set a good example and implements extensive sustainability measures in logistics projects. In doing so, we are guided by the internationally applicable ESG criteria. In the area of environmental sustainability, photovoltaics is one of the building blocks, others are green roofs and façades, the use of geothermal energy as well as green outdoor areas that employees can also use and thus contribute to social sustainability. One particular focus for Panattoni is the revitalization of brownfield sites. In this way, we provide users and municipalities with new, high-quality areas without having to seal up land. This benefits the environment, climate and biodiversity, but also makes an important contribution to climate adaptation.
Which of the CEE countries do you consider to be the most promising in terms of locating new warehouse investments?
This is very difficult to say because due to the increasing international importance of e-commerce and resilience strategies, the role of logistics will rise in the foreseeable future in each of the CEE countries – and beyond. There is a lot of potentials to grow in each of the designated countries. Panattoni has recognized and decided to enforce activities in the Slovakian market- as well as opening its subsidiary in Hungary in 2021.
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