23008_Nearshoring Report

This is particularly the case when considering industries that are likely to included highly automated production elements – as discussed before, a key driver of nearshoring will be where production is less exposed to labour-intensive activities, and therefore more swayed by the cost of that labour. Our research has shown that businesses investing in automation have typically favoured high-quality, often new build facilities, as they are more capable of accommodating the sophisticated systems that manufacturers require.

These buildings, especially at the large end of the size spectrum, are also more likely to be built-to-suit. Typically we see production and manufacturing process optimisation driving ultimate facility design. This is likely to lead occupiers with significant plans for automation to commit to new and high-quality buildings – especially build-to-suit, on either an owner occupied or leasehold basis – rather than existing older assets. This will particularly be the case in markets where there is little existing stock. The often high occupier capex for new production tooling or automation and robotics can also mean extending lease lengths to permit depreciation, which may open up new transactional structures and opportunities, such as income strips or joint ventures.

REAL ESTATE

REAL ESTATE ASSETS PLAY A SIGNIFICANT YET TACTICAL ROLE IN THE DEVELOPMENT OF NEARSHORING STRATEGIES AND THE ABILITY TO ENSURE THAT PRODUCTION CAN BE ACHIEVED BOTH OPERATIONALLY- AND COST-EFFICIENTLY. Nearshoring, along with other investment decisions, has driven significant growth in occupier demand for floorspace. In 2022, manufacturing occupiers committed to nearly 10 million sqm of space, up 27% compared with 2017.

EUROPEAN LOGISTICS & INDUSTRIAL TAKE-UP BY OCCUPIER SECTOR

50

OTHER

LOGISTICS

45

RETAIL

MANUFACTURING

40

MILLION SQM

35

30

25

20

15

10

5

0

2017

2018

2019

2020

2021

2022

SOURCE: Cushman & Wakefield Research

49

50

C U S H M A N & WA K E F I E L D

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