Panattoni, known for its global presence, recently expanded into Spain and Portugal. How has this new venture unfolded?

We established our Madrid office in March 2020, right before the country underwent lockdown due to the pandemic. Despite this challenging timing, we assembled a robust team. However, travel restrictions hindered our settling process in Portugal, causing some delays in our business plans. Fortunately, 2021 has been favorable, and we’re on the brink of announcing new projects in the region.

Considering the industrial and logistics landscape, where do you perceive the greatest potential in Portugal?

Portugal’s industrial and logistics market leans more toward ownership than leasing, which presently affects transaction volumes and customer profiles. As this shifts, more clarity will emerge, allowing for increased transactions. Currently, our focus primarily revolves around speculative projects in Lisbon and Porto. These cities draw significant investor attention due to concentrated industrial activities in their outskirts. However, we’re also exploring build-to-suit prospects in other parts of Portugal, fostering relationships with clients doing business in these areas. Our aim is to cater to clients unable to afford or preferring not to develop or purchase their logistics facilities independently. While e-commerce isn’t a dominant driver in Portugal’s logistics sector yet, we anticipate its growth and aim to be prepared to accommodate new retailers when it gains momentum.

Where is the growth concentrated in Portugal’s industrial and logistics sector?

The primary growth has historically been centered in the Greater Lisbon Area, boasting a substantial inventory of 2.4 million square meters. However, the landscape is evolving due to escalating land costs. Consequently, tertiary markets like Alcochete and Montijo, once overlooked in favor of traditional zones like Azambuja or Carregado, are gaining prominence. Similarly, in the Greater Porto Area, Vila Nova de Gaia is challenging the established Maia industrial market. This shift has prompted developers to exploit lower development costs in these areas, constructing modern facilities in regions previously deemed less desirable.

Despite this growth, what challenges persist within the Portuguese industrial and logistics market?

Space scarcity remains a significant challenge, evident in an all-time-low vacancy rate of 2.5% by the end of 2021. However, this scarcity presents opportunities for both investors and occupiers. There’s a consistent demand for new facilities, likely leading to further Build-to-Suit (BTS) and speculative constructions. Occupiers can secure modern installations at lower rental rates compared to European averages while accessing a qualified yet cost-effective workforce.

What do you anticipate for the future of Portugal’s industrial and logistics sectors?

We anticipate heightened interest in the Portuguese market, especially with declining yields across Europe. The recent activity underscores that the country’s industrial and logistics sectors are far from their peak. The ongoing modernization drive emphasizes new standards in design, safety, efficiency, and environmental impact. Key market players are well-positioned, likely attracting interest from new entrants seeking to leverage their experience. However, efficient project licensing and swift execution will be pivotal in staying ahead in this rapidly evolving landscape.