Despite the uncertain geopolitical climate and soaring worldwide inflation, in the first half of 2022 the French logistics investment market proved resilient with over €2 billion invested. Philippe Graziani, Country Director France at GLP, looks back to the first half of the year and shares his vision of the market for the coming months.
Resilience and performance: these are undoubtedly the two key words to sum up the French logistics investment market in the first half of 2022. Despite war breaking out in Ukraine last February and a policy of raising bank interest rates to combat galloping inflation, more than €2 billion was injected into this asset class. This is the best start in history for logistics investment – ahead of the first half of 2020 – with volumes up by almost 35% year-on-year.
“Admittedly, this figure does not reflect recent market developments, but it fully establishes the logistics sector as one of the main investment targets,” observes Philippe Graziani, Country Director France at GLP.
Over the first six months of the year, the GLP team has been very active in acquisitions in France with over €500M invested: for example, the European Trio portfolio – of which 11 out of the 18 warehouses that made up the portfolio are located in France , the 100,000 sqm platform in Ablaincourt-Pressoir, a 40,000 sqm building in Derval and a 100,000 sqm multimodal building under construction in Denain.
“With these investments and our ongoing or future developments, we have doubled the size of our French portfolio in one year, with nearly 1.6 million sqm under management,” continues Philippe Graziani. “We will look to maintain this strong growth strategy in the coming years.”
Opportunities to be seized
But how can these growth ambitions be achieved with uncertain geopolitical and economic headwinds?
“The main impact of Russia’s invasion of Ukraine has been to increase energy and construction costs, not to mention the global inflationary context and the tightening of financing conditions by banks,” replies Philippe.
“In this context, some deals are not going through to the final signing, some operations are being rescheduled and some investors have decided to wait for better conditions to sell their assets. A market that is certainly more “difficult” to understand, but synonymous with “numerous opportunities to be seized”, believes Philippe Graziani. “The “sky is the limit” is coming to an end with a more balanced market than before,” he continues. As a reminder, through its various investment funds, GLP finances its French acquisitions without debt conditions. “The structuring of the debt allows us to be agile and responsive to investment opportunities.”
A two-stage strategy
With the objective of reaching the 2 million m² mark under management by the end of 2023, GLP is deploying a two-stage strategy. Firstly, by being offensive in terms of investments – following the example of the Trio portfolio, and the signing of a 100,000 sqm logistics platform in Denain in the North of France.
“As a long-term investor and asset manager, we are diversifying into urban logistics and light industrial,” says Philippe.
“Depending on the opportunities, we will be able to position ourselves across portfolios of obsolete assets where it is possible to deploy a value creation strategy.
Secondly, GLP intends to pursue a policy of undeveloped land in France.
“In the eyes of the market, we want to keep our DNA as a developer and promoter,” he explains. By the end of 2023, GLP is piloting a project pipeline of 250,000 m2 in France.
“With the occupier market holding up well and the supply of logistics space becoming more difficult, we expect rental values to rise over the next few years. Our “de facto” objective is to develop 150,000 sqm per year in the medium term.
In order to be at the centre of the development map, GLP’s French teams are committed to actively sourcing available land.
“Our plan is to hold land to feed our pipeline of developments and to satisfy the wide range of customer requirements that we have,” continues Philippe.
Betting on territories
With a view to offering a strategic logistics network across France, GLP has taken positions in different locations – and sometimes outside the core markets – such as Tours, Le Mans, Bordeaux, Nantes and Rennes.
“Previously these secondary locations were not closely scrutinised by investors, and they are now attracting significant interest following the recent health crisis,” observes Philippe.
Depending on the opportunities, GLP will aim to keep the most qualitative locations in its portfolio over the long term.
“We will be agile by carrying out development projects before reselling them selectively”, explains Philippe.
“Our ambition is to raise new GLP flags in Rouen, Le Havre, and in the east of France – in particular in the metropolises of Toulouse and Strasbourg. Thanks to our 360° strategy, we are well on the way in joining the big five of French logistics players”, Philippe adds.