Logistics Real Estate: Facing the Covid-19 Challenge, by Sandro Innocenti, Country Manager Italy

Logistics Real Estate: Facing the Covid-19 Challenge, by Sandro Innocenti, Country manager Italy

Over the past 10 weeks we have all needed to deal with personal and professional challenges posed by Covid-19. We’ve needed to adapt quickly to a complex, new reality between home-life and work.

In this difficult period business has not stopped. Thanks to our investments in technology our teams have been able to manage both business operations and customer and supplier relations remotely. Prologis Italia will continue to work in this way until such time as is prudent to reopen our offices. By contrast, our construction managers are already working onsite with customers on six BTS projects.

All business operators are facing many unknowns in light of the global pandemic. To try to understand how the logistics real estate sector will evolve as a result of both changes in consumer behavior as well as the reorganization of supply chains, Prologis is publishing an ongoing series of in-depth COVID-19 reports.

In the near future, the uncertain economic environment will impact global demand. For an unforeseeable period, it is expected that the sectors most affected will not be able to return to operating at pre-pandemic levels. In particular, the tourism, transport, traditional retail, catering, and automotive sectors are likely struggle to recover. This is both because of the social distancing measures introduced and because they represent sectors of the economy where consumption is discretionary.

Changes in consumer behavior are expected to be long-lasting. In Italy, this includes a rapid increase in e-commerce and the discovery of online shopping and home delivery. This paradigm shift will benefit e-commerce companies and expected to accelerate the transformation of the food sector while also driving the development of urban logistics.

There is no doubt that the current situation will lead to a profound rethinking of supply chains. The pandemic may also expedite the global process that had already started globally following trade tensions between the United States and China. From this perspective, it will be necessary to evaluate how supply chains can shorten, on what level the revaluation of the ideal ratio between inventory and sales will be confirmed, what changes e-fulfillment will undergo and what supply strategies will be.

Although characterized by elements of great uncertainty, the new reality we have to deal with should in the medium term lead to a further development of a new generation of the logistics real estate sector. This means increasingly sustainable and efficient buildings, welcoming logistics parks redesigned to offer a wider range of services to employees and local communities and buildings for urban logistics designed with new criteria, supporting ever "greener" mobility.
 

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