23008_Nearshoring Report

N E A R S H O R I N G

Nearshoring as a concept has been talked about for some time but a combination of the economic, political and supply chain effects of Covid-19 together with a rapidly growing focus on climate change and sustainability mean a conceptual conversation of the last decade now has more momentum to affect meaningful change in business strategies. Nearshoring creates opportunities for businesses to improve supply chain resilience, shorten order lead times, shorten final product journey times to customers, increase flexibility and control over production quality and improve sustainability of their supply chains. This is turn creates opportunities for developers and investors to create real estate assets that will support occupiers’ nearer-to-home strategies. This could open new geographies to occupiers, developers and investors to deploy capital in new operations and assets which could in turn create opportunities for operational advantages, value creation and elevated investment return on assets are secured on long-term commitments (particularly where investment in automation and production equipment infrastructure is high). For occupiers, reengineering supply chains and establishing new operations can involve complex and interrelated factors but the cost and operational efficiency benefits could be significant. Similarly, for developers and investors, deploying capital in new geographies can represent risk but also great opportunity, particularly where existing relationships with tenants can mean a level of understanding at the outset.

CONCLUSIONS