Logistics & Industrial Asset Optimisation

Once operational efficiencies are in place, focus can then turn to higher value strategies. Over the past several years, real estate assets have generated steady cash flow and returns. This reality has been challenged, although arguably the L&I sector has remained one of the most robust given the underlying strength of occupier demand. While some of the impacts are temporary, others such as sustainability initiatives are expected to be more permanent. These longer term, structural changes, must be considered as well as the required changes that these shifts are likely to bring. This means assessment and reassessment of “risk”. A deeper understanding of existing assets and portfolios is therefore required through the analysis of upside and downside scenarios to identify assets with most operational risks and how to best position them for the changing operating environment. Business plans and capital expenditure then need to be adjusted accordingly to ensure they incorporate the relevant value add propositions. As part of this, owners of real estate need to act more flexibly by delivering an active management solution.

Configuration, specification and design will be crucial factors in the ongoing operational appropriateness of assets. If buildings and sites are no longer functionally efficient for users of the spaces, they will struggle to appeal to the market and will therefore represent a risk of void and income and value erosion. Focusing on how to improve an asset for ongoing market appeal can help to improve retention and enhance commercial opportunities. Additionally, in an asset class that is seeing increasing demand from occupiers for more and more energy savings, opportunities to ensure secure supply of sustainably generated energy can also help to enhance landlord and tenant relationships. Leveraging the intrinsic characteristics of logistics and industrial assets – such as large roof surface areas for the installation of PVs – or the opportunities for landlords to facilitate co-operation across entire logistics parks or industrial estates, could create significant opportunities for tenant engagement, retention and asset value enhancement.

Accordingly, data and analytic insights are fundamental to making strategic decisions regarding commercial lease negotiations, asset valuation and improved tenant experience and operations. Technology and digital solutions will be among critical enablers to usher in the new era of real estate, allowing not only the customisation of spaces according to changing needs, but also taking building management to the next level and addressing sustainability and affordability. Fundamentally, the future of asset optimisation is founded upon landlords and asset managers creating a more transparent and collaborative relationship between owner and occupier to respond to global market trends.

LOGISTICS & INDUSTRIAL ASSET OPTIMISATION FOR TOMORROW

CUSHMAN & WAKEFIELD

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