The industrial and logistics sector in Portugal currently stands out as one of the most dynamic in the commercial real estate market, driven essentially by the growth of online commerce and the adoption of nearshoring strategies by companies. Proof of this is the most recent data that points to a notable growth in demand, with more than 400,000 square meters (sq.m) occupied in the first half of 2024.
In contrast to some of the main European markets, where a slower recovery is taking place, Portugal should continue to benefit from its competitiveness in terms of costs in the European context, to boost the growth of the industrial and logistics sector in the coming years.
However, this growth brings with it pressing challenges regarding the response capacity installed in the country, in a sector characterized by outdated stock compared to international quality standards. With a history of incipient activity to promote new assets, there is currently an unprecedented moment in the industrial and logistics sector, in terms of the volume of new developments towards greater qualification of the offer.
Despite the robust promotion dynamics, a large portion of it consists of development for self-occupation, meaning that the availability rate in the sector is expected to remain low, with the need to place products on the market and update existing ones remaining.
In this context, sustainability standards and ESG policies emerge as one of the main challenges currently regarding our positioning, compared to other European markets, where BREEAM “Excellent” certification is already the standard.
In fact, developers are beginning to address these issues in new projects, an example of which is the Ermida Park – Parque Logístico da Ermida and the DPD Distribution Hub, scheduled for completion this year, as well as the Panattoni projects scheduled for the coming years with BREEAM certifications. However, Portugal still has a long way to go to catch up with other European markets in terms of qualifying its offer in the industrial and logistics sector.
Alluding to the current stock, there is also great potential for development on the axis between Pior Velho and Carregado, through the rehabilitation of the numerous deactivated factories in this area, taking advantage of its attractiveness due to its proximity to the city of Lisbon.
The high demand and low availability rate in this axis should lead some developers, who favor this proximity and are faced with the scarcity and cost of land in Greater Lisbon, to invest in the rehabilitation of these assets to create investment opportunities in the industrial and logistics sector.
In short, the considerable increase in stock expected for this year will not be sufficient to meet the current and future needs of rapidly growing demand. In this way, we anticipate an auspicious future for the industrial and logistics sector in the coming years, although with several challenges for us to catch up at an international level. The market is growing and the opportunities exist, we just have to raise the bar.
Opinion article by Catarina Branco, Research Analyst at Worx, published in Magazine Imobiliário on October 4, 2024.