The situation of the global economy is highly uncertain, due to the Covid-19 emergency, and the outcomes are hard to predict. As the situation will become clearer in the following months, information and related predictions will become more reliable
Following the best year on record both in Milan and Rome office markets, absorption figures in 2020 fell far below the average of the past decade. While part of the decrease was expected, the uncertainty and business turbulence brought about by the Covid-19 pandemic is leading companies to cut live costs, while at the same time outlining new strategies. On the investment side, Milan remained the focus of office investment in Italy, with Core and Core + assets the most sought after and an increasing domestic activity due to a more cautious approach by foreign investors. Prime rents are likely to be under pressure, but sustained by tenant incentives. Prime yields are expected to remain stable, while an increased mismatch between vendors' and buyers' expectation will impact secondary assets.
After a sharp recovery in Q3, the new containment measures led to a slowdown in economic activity since October. Also in traditional retail the hardening of restriction measures has cooled down optimism, partially offsetting the improvement gained since May and reversing the positive performance experienced by the retail properties in the third quarter. While players appear to postpone major decisions, perspectives for the industry are strongly linked to the evolution of the pandemic.
The Industrial & Logistics sector ended 2020 booming, confirming its resilience to the Covid-19 pandemic compared to other asset classes. 3PLs, E-commerce and large-scale distribution operators were the most active players, looking for modern, efficient and strategically located warehouses, with an increasing general interest towards last mile buildings located near urban areas. Speculative developments on mid-size buildings are raising in well-established locations, such as Lombardy, Veneto, Piedmont, Emilia Romagna and Rome area. Many investors – both specialized and not - are looking out for logistics opportunities in Italy, keeping level of demand even more dynamic than pre-Covid pandemic. The outlook is positive for this sector thanks to its robust fundamentals.