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The warehousing and logistics industry, which for years was considered an area where there are no frequent changes, has gone through the last decade A dramatic transformation with the introduction of advanced technology and robotic means into the field. Online shopping, which brought about a change in the transportation and storage needs of import companies all over the world, led to accelerated technological development in the industry, especially in regards to the automatic stacking that enables the storage of a large amount of surfaces in a given area. The technological changes not only increased the investment required for the establishment of the logistics warehouse, but created a new reality that requires buildings with different characteristics than what was customary in the last 40 years. In view of the changes, the question arises whether the logistics branch, which was the lot of entrepreneurs and is considered a field where worthwhile investments can be found, is still attractive to investors? An investor who examines logistics real estate for investment should take into account several essential risks:
1. The dynamics of the markets can bring about further changes in the storage methods in the coming years, and will further reduce the demand for warehouses with a height of 12-14 meters, and consequently the return on them. 2. The price of the technology has decreased over time – and as a result, the demand for advanced automatic fencing will rise among more end users, which will require in the future to adjust the property in order to be able to rent it. 3. Even when the warehouse is adapted to the most advanced technology, it is adapted to the needs of a specific end customer. Therefore, if a tenant is replaced, it is not certain that he will find a tenant with the same needs, and a large additional investment will be needed. 4. The industry operates in small increments. Regardless of the size of the investment, the rent threshold that the logistics companies can pay today is 38-45 NIS per square meter and it is not possible to rent properties at higher prices. So why anyway? First, the warehousing and logistics industry is an area where the lease periods are long (10 years + option to extend), which guarantees the investor “peace of mind” for a significant period. In addition, unlike the office industry where moving to a new office is done relatively easily and does not involve a significant investment on the part of the tenant, moving to a new warehouse involves a very significant expense for the business and the end user will not do it easily. In addition, the field of logistics, despite the changes in it, is a more traditional, less “glamorous” field, and its competitiveness is lower than in the office or trade sectors. When it comes to offices or stores, the value of the property drops quickly in response to the construction of a newer building in the area, while logistics properties maintain their value for a longer period, and the response to technological changes is slower and allows for certain assessments by the property owner of the new situation.
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