The e-commerce era has brought significant changes in the way we perceive the consumer experience. According to Geoaxis, the Logistics sector and the overall transit industry have immense scope for development and growth in Greece. Deloitte research (2020) reveals that the sector contributes 10.8% to GDP each year, which is below the European Union average of 13.0%.
Mr. Yiannis Xylas highlights that the forecast for 2024 is a continued increase in demand and rents, but at a slower speed, and an increase in yields around 7%. Greece has unique long-term prospects if it can emerge as a transportation hub in Southeast Europe and a point of connection between Western Europe and Asia.
According to the Logistics Performance Index by the World Bank, Greece occupies the 19th place worldwide in 2022, which is a significant improvement from the 42nd place it held in 2018. Greece has improved in all areas investigated by the Logistics Performance Index, including private sector reliability, extroversion of Greek companies, and digitization.
The stable position of the port of Piraeus, the expectations from the ports of Thessaloniki, Alexandroupolis and Volos, the upgrading of railway transport, and the new investments such as the Thriasio Freight Center, the Gonou camp, and Piraeus (COSCO) give the Logistics sector excellent growth prospects. According to data from Cosco Shipping Ports, the commercial port of Piraeus is the fifth largest in Europe and the third largest in the Mediterranean after Valencia and Tangier. During the period January-September 2023, a total of 3.44 million containers were trafficked, marking an increase of 5.1% compared to the corresponding period of 2022.
European Logistic Property Census 2023
According to Tritax EuroBox plc and Savills UK European Logistic Property Census 2023 an improving outlook among occupiers was observed, with 42% saying current business conditions are more favourable than six months ago. This is an improvement compared to the 35% who felt the same way a year ago, suggesting that occupiers have adapted to the economic situation and are more optimistic about the future. However, respondents in the broader property sector, such as developers, landowners, and agents, have become more pessimistic (27%).
The current economic situation is uncertain, as ref lected in the variety of responses we received from all categories of respondents – ranging from "much more favourable" to "much more difficult." Occupiers were less concerned with rising costs than last year (42% in 2023 vs. 60% in 2022), likely due to slowing inf lation in recent months. Economic uncertainty remains the second most common factor affecting businesses, with 28% of responses citing it as a concern, consistent with last year's survey.
Other issues, such as labour availability (21% vs. 34%), end consumer price issues (19% vs. 28%), and warehouse space availability (16% vs. 18%), have all eased this year. Rising rents and access to labour remain the biggest concerns for occupiers, with a lack of supply of new buildings still ranking highly but starting to be superseded by new concerns: we have seen a significant increase in the number of occupiers citing power supply and the zoning/permit system as a concern. Power supply becoming an increasing concern is notable, given that implementing sustainable measures has fallen.
There was observed this trend throughout the census, with energy supply and efficiency ranking as significant concerns for occupiers even as ESG as a concept is currently outweighed by more short-term factors that impact the corporate bottom line.
The absorption of available warehouse and industrial building volume in Europe was 13.2 million square meters in the first half of 2023. This is down from the record absorption of 21 million square meters during the pandemic but up from 11.7 million square meters in 2018 and 2019. Despite a 4.7% increase in vacancy, supply remains relatively tight, leading to an average rent increase of 10% last year.
87% of users who are looking for new space expect to need a space larger than 10,000 square meters, compared to 78% in 2022. Germany is the country with the most investment interest for expansion in the next three years, with 45% in 2023 versus 43% in 2022. Spain is also showing particular growth prospects over the next three years.
The domestic Third Party Logistics market experienced a downward trend from 2009-2015, following the course of the Greek economy, with an average annual rate of decrease of 3.8%. In 2016, the negative trend was stopped, and until 2019, the market showed positive rates of change, recording a cumulative increase of 15.5% (2019/2015 change).
The pandemic that broke out in March 2020 had a catalytic effect on the development of the sector. Emergency measures such as the suspension of the operation of the majority of commercial outlets for a long period of time reduced the activities of many businesses - clients of the sector - with a direct impact on its revenues. Thus, the upward trajectory of the domestic Logistics services market was halted in 2020, showing a 5.4% drop compared to the previous year. However, some businesses showed an increase in their sales within 2020 (e.g. supermarkets, greengrocers), which mitigated the overall losses.
According to forecasts, in 2021, the market of 3PL services is estimated to have returned to a growth trajectory. The growth of the country's GDP in 2021 proves its strong correlation with the evolution of the domestic Logistics market. The 3PL industry is estimated to have expanded by 3.8% in 2021 compared to the previous year. The degree of concentration in the industry is relatively high, as the five and ten largest companies covered 36% and 52% of total 3PL sales in 2020, respectively.
41% of the total market value for 2021 came from the Industrial sector (companies active in oil, energy, cement & construction, manufacturing, etc.), while 59% came from Super Markets and the Commercial sector.
Several companies are active in the sector, including leading ones such as Sarmed, Goldair, HIG Capital (MAKIOS Logististc & VEINOGLOU), Golden Cargo, PAEGAE, Diakinisis, and large international groups such as DHL and GEFCO. These companies are either (inter)transportation companies that also provide logistics services or pure 3PL companies.
The quality of warehousing and distribution facilities in Greece has notably improved over the last decade. This is thanks to the investment by major 3PL suppliers in larger, technologically advanced warehousing and distribution centers. The overall storage capacity of logistics facilities in Greece has more than doubled between 2003 and 2009, prior to the financial crisis. This expansion has been accompanied by investments in new building materials, warehouse equipment, machinery, management systems, security, and automation.
However, the average size of warehouses that have been built or upgraded has not increased. According to a study by the University of the Aegean, only 14% of warehouses have internal storage space greater than 45,000 sq.m., while more than 62% are smaller than 10,000 sq.m. In 2022, the volume of absorption of new storage spaces in Greece reached 250,000 m2, with an estimated 240,000 m2 absorbed during the period January to September 2023, according to research by Proprius.
In Attica, the housing uses, including industrial production, traditional warehouse, and 3PL, are estimated to amount to 3.5 million m2, of which approximately 40% consists of production factories that have stopped operating and are now used as simple dry cargo storage areas. At the end of 2024, an additional 250,000 m2 of warehouses are expected to be added to the stock in Attica, according to Mr. Christos Kakkava of JLL Athens Finance.
The existing logistics infrastructure in Greece is made up primarily of small-scale warehouses and interconnection facilities that are scattered and fragmented across the country. The internal usable height of these warehouses is below 9m in the majority of cases, which limits the possibility of storage through pallets, a modern storage method that is commonly used in larger warehouses.
Modern warehouses require an internal usable height of over 10m, which is not easily found in existing buildings that are up for sale. Many new projects for storage areas and logistics facilities are expected to begin implementation in 2024, with investments of up to 500 million euros in Athens and Thessaloniki. REIC companies, such as Briq Properties, Premia Properties, Prodea Investments, Trastor, HIG Capital, and recently Noval of the BIOHALCO group, are actively involved in these projects. In the last 12 months, Dimand has also implemented logistics investments in Northern Greece.
