In Switzerland as in the rest of the world, logistics is quickly consolidating as a promising sector and is proving great resilience in the current crisis.
A need for more storage spaces is to be expected on the medium term. Industry will aim to increase their stocks and e-commerce will experience a new surge, regarding especially the food industry, with the need for more storage centers and logistics facilities (JLL 2020).
Advanced Swiss industry and high export volume
Due to its labor and land costs, Switzerland does not represent an international goods hub and Swiss logistics mainly concerns goods that have Switzerland has their destination or origin. Nevertheless, thanks to Switzerland’s high purchasing power and its advanced and renowned industry, the flow of goods is remarkable and continues to grow. Swiss export volumes experience an average growth of 3.6% per year (Swiss Federal Customs Administration, Credit Suisse 2019) and the logistics sector itself is growing substantially, with an increase of 15% in the number of logistics workers in the past 8 years (Credit Suisse 2019).
Rent increases for larger logistics surfaces
In recent years, investors have benefited from an increase in rents. However, differences are observed depending on the surface of the premises: the rent of buildings of less than 1000 sqm increased of about 20%, while a higher growth in rent was registered for larger surfaces (CBRE 2020). Relevant factors affecting rent include location, the possibility to operate 24/7, building technology services, warehouse capacity and height (Credit Suisse 2019).
Demand for logistics surfaces and developments expected to increase
Investors currently tend to draw their attention towards pre-rented surfaces, as new buildings would demand higher rents than the current market offer. New buildings built by promoters-investors are still rare in Switzerland, but the trend is likely to change in the medium term. The increase of online sales is expected to generate an annual increase in demand for logistics surfaces of 40’000 sqm in Switzerland alone. (CBRE 2020).
This increase in demand is reflected by the current dynamic development of construction activity. In 2017 construction investments in warehouses amounted to CHF 801 million (CBRE 2020). The main sector involved are wholesale and retail trade (including major Swiss food retailers), construction and pharmaceuticals.
From a geographical point of view, the focus is on the Basel-Bern-Lucern-Winterthur quadrangle as well as on the Cantons of Vaud and Fribourg, that serve as a link to German-speaking Switzerland (CBRE 2020, Credit Suisse 2019).
E-commerce, industrial growth and technology will shape the future of logistics
As already mentioned, the greatest structural changes come from e-commerce and affect especially smaller-part logistics. Nevertheless, the industrial sector will likewise be concerned as companies will aim to increase their stocks after the current crisis.
Technology will also drastically change the logistics industry: warehouses will be able to become fully automated, gaining greater capacity, as already started by some e-trade giants such Amazon and Alibaba (Credit Suisse 2019).
Tackling future challenges
In conclusion, the stability and growth potential of logistics will continue to offer investors interesting long-term opportunities and represent an ideal instrument for diversification. Efficiently tackling future challenges such as digitalization, the demand for ecological measures and rising client expectations will allow the sector to be resilient and profitable over the long term.