23008_Nearshoring Report

Another key consideration will be access to power. Highly-automated production systems typically require a highly level of energy and materially more than more manual operations. Developers and landlords are already focused on the growing requirement of energy from logistics and industrial businesses within their estates but this could grow significantly as the nearshoring phenomenon gathers pace. Sourcing, securing and providing access to power will prove a significant differential for occupiers seeking new space and this will also increasingly need to be derived from sustainable sources. Diversity of power supply for critical manufacturing can also be important to some occupiers where there is any concern around business continuity. Sustainable energy generation has become a huge focus for logistics and industrial developers over the past several years as a compliment to national energy supply networks. Energy supply risk has been growing in some countries such as Germany, Italy and Bulgaria following the Ukraine-Russia conflict. As a result of the conflict, European countries imposed limitations on the importation of Russian fuels, whilst Russia has engaged in activities to limit supply including shutting down key export routes, including the Nord Stream natural gas pipeline.

Domestic energy resilience is therefore likely to propel the development of sustainably sourced energy, such as solar, wind and tidal, as well as nuclear sources. We are seeing the source of generation at a country level increasingly matter in macro level location decisions. The high intensity of coal use within CEE is a drag on its overall competitiveness as occupiers look to deliver Net Zero targets; that said actions are in place in the region to diversify from coal to more renewable power sources, which will support its attractive production cost position. At a park or even asset specific level, developers are increasingly offering or even including as standard elements such as photovoltaic (PV) cells, batteries for energy storage and onsite shared resources such as combined heat and power (CHP) plants for distribution to users on parks. These are likely to create attractive options for occupiers looking to include higher levels of automation especially when energy supply is volatile and expensive.

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