Italian Logistics Snapshot | H1 2022

Key takeaways:
 

• The Italian economy is now facing headwinds
  The Italian economy decelerated sharply in Q1 2022 amid higher geopolitical uncertainty stemming from the war in Ukraine, although the latest GDP growth numbers came in higher than expected, largely supported by investment. ​

• But demand for logistics assets should remain supported​
  Structural changes since the pandemic have accelerated demand for the logistics sector. Prime yields should accelerate and then head back towards long-run average once macroeconomic conditions stabilise. Rents for high-growth geographies should benefit from sustained occupier demand, while existing rent contracts should factor in higher inflation. Rising construction costs and supply constraints could impact forward funding purchases since investors may be reluctant to accept higher inflation risks.

• Investors remain prudent but assets are more institutionalised​
  Looking ahead, risks to GDP growth are skewed to the downside because of rising inflation and tightening financial conditions. Although investors remain cautious, logistics assets are more institutionalised, and this should help broader market liquidity conditions. ​

The Italian economy decelerated sharply in 2022 amid higher geopolitical uncertainty, but GDP growth in Q1 surprised on the upside, largely supported by investments.

The logistics sector confirms its positive trend in H1 2022, proving to be one of the emerging sectors attracting inverstors’ appetite. In terms of capital markets volumes, logistics hit a new record high reaching in H1 2022 the highest number of investments ever recorded, totalling almost € 2 bn.​

Moreover, several lands and development projects were transacted in the market: both investors with a long-standing presence in the market and major European and global property companies are looking at Italy as a high potential new European logistics destination.

Logistics leasing increased in take-up: best first semester in 10 years

In the first semester 2022, logistics take-up in Italy totalled around 1.5 million of sqm, +21% on the same period of one year ago.​ The market was particularly dynamic, recording 82 deals, almost the same as the first semester of 2021, but with a larger size band.

The demand was driven by grade A assets (94%) and by 3PLs operators (58% of deals) which affected more than half of the demand. Tenants are increasingly more focused on quality and grade A assets, leaving less perfoming assets aside, although small size assets, with strategic placing and favorable rents are still valued.