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The importance of location in the valuation of logistics activities

Logistics activities are undergoing major changes linked to consumption patterns: the evolution of warehouse formats towards the XXL, an increase in technological advancements and an increased interest in small warehouses for “last mile” logistics are all affecting the sector. The value of a logistics asset therefore depends on its location, configuration and occupiers. The valuation of logistics warehouses is all the more crucial as the attractiveness of returns makes competition in this market increasingly intense.  

  • 1 912

    Amount invested in million euros

  • -61,71%

    Evolution of the amount invested compared to 2022

  • 4,75%

    Premium rate of return

S2 2023 - Research - BNP Paribas Real Estate

A team dedicated to valuing logistics assets

Interview with Jean Claude Dubois, Chairman of BNP Paribas Real Estate Valuation France. Find out why we are the market leader in the valuation of logistics assets.

Our expert weighs in

Thomas BRAUD

Real estate expert

What are some of the main characteristics of the logistics warehouse asset?

Warehouse formats and their level of technology are changing thanks to the popularity of XXL and automation, while interest in “last mile” logistics has made small warehouses more attractive. The valuation of warehouses is therefore directly linked to their use in a supply chain (double-sided platforms - courier - or refrigerated warehouses, for example) and their ability to be converted for new uses (reversibility). Now more than ever, location is a crucial aspect of warehouse asset valuation (proximity to consumption centres and roads).

What are investors' expectations of this asset?

To limit the risk of storage vacancies, investors prefer the most sustainable facilities: platforms located near large urban areas which are synonymous with consumption as well as those served by a good road network. Other attractive points include: new buildings to limit the risk of obsolescence and long-term leases. Finally, the long-term adaptability of certain warehouses must become an essential criterion for investors and asset managers.

What are the main criteria for evaluating a warehouse?

Location and access to infrastructure is one of the most significant criteria for valuing a logistics asset.

The warehouse class

(AAA, AA, A, B or C). Level of functionality, quality, safety, etc.

Distribution and equipment

Faster obsolescence of some warehouses (refrigerated)

Geographical location

Importance of proximity to transport axes

Taxation

Impact of property and other taxes, which vary by region and country

The term of the lease

Long leases (9 or 12 years in France) offering more security

Logistics has become a major commercial issue for companies striving to modernise their platforms and deliver goods quickly and cheaply. Supply chains must be reliable, fast and economical. The trend is leaning towards XXL warehouses, automation and shared solutions between logistics service providers or shippers. Rent varies according to the physical characteristics of the warehouse, including its age and the charges it incurs with property taxes. Rent is a determining factor in the calculation of a logistics asset’s value.

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