23008_Nearshoring Report

FOR OCCUPIERS

FOR DEVELOPERS

• Businesses’ nearshoring plans could create opportunities to partner with investment capital: investors remain keen to explore investment into industrial and logistics property assets, particularly where occupier commitment is secure and where return profiles are attractive. New developments with strong commitments by established businesses could prove attractive to some investors, particularly in core countries in Western, Southern & Northern Europe where risk appetite is low and also in new geographies, which may represent higher returns for investors with higher risk appetites. • There are also growing opportunities to structure leases to include elements of operational capital investment, such as in logistics and manufacturing automation systems and technologies, within rental agreements. Capital contributions by landlords that can be rentalised over the term of a lease could prove attractive to occupiers given the typically longer period of write-down than within standard depreciation periods should the occupier have to capitalise the investment themselves.

• Developers could also look to explore relationships with local developers and contractors to ensure on-the ground capabilities in new geographies. This kind of collaboration could also bring larger developers’ experience and understanding of expected

• Opportunities to establish new facilities may lead occupiers into new geographies – carefully understanding the benefits and challenges of these locations will be crucial to integrating these new facilities and operations into supply chains. Locational analysis, supply chain mapping and scenario planning will help to inform occupiers how and where to best deploy their resources. We are increasingly seeing occupiers explore ‘Digital Twins’ of their supply chains to virtually walk through these changes before implementation. • Nearshoring could also mean expansion of existing facilities: this will require careful programming not only to plan, manage and deliver but also to ensure expansion does not interrupt the smooth operation of existing production lines. There could also be opportunities for improvement to existing assets , either through refurbishment or redevelopment but also the retrofitting of sustainable energy generation technologies, such as PV panels or air source heat pumps.

• Developers may have opportunities to leverage relationships with existing customers to explore collaborating on the delivery of new facilities . Having established, well-functioning relationships with occupiers could make the learning journey of locating, transacting and delivering new facilities easier for both parties when working together from a position of trust and understanding. • Developers also have the opportunity to deliver for occupiers the standard or specification of building that they are accustomed to receiving from development partners in established geographies. Knowing what they are going to get in terms of building design and quality could help to remove some of the ‘risk of the unknown’ for occupiers considering new markets for nearshoring. • Developers could look to secure land positions in key geographies, especially those where there is little international developer presence currently, in order to leverage opportunities to deliver new spaces for nearshored facilities.

building standards for occupiers to new geographies which could be transformational for the real estate environment in these countries.

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