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
After the significant take-up recorded last year in both Milan and Rome, leasing activity slowed down in the first half of 2020 as a combined result of the uncertainty generated by the Covid-19 pandemic and the structural slow down following the strong performance of last year. In Milan take-up stood at 163,000 sqm, a decrease of approximately 30% compared to the first half of last year and in Rome the contraction has been even deeper: nearly 75% reduction reflecting a take-up of 45,500sqm. Levels of demand for grade A space continue to be at an all-time high, highlighting companies’ propensity to identify efficient spaces that can improve the wellbeing of their employees and therefore improve productivity. New health and safety measures linked to the Covid-19 pandemic are set to become a new driver for future office space. On the investment side, Core and Core+ product continue to be the focus of international investors, while opportunistic and value add opportunities may encounter financial hitches. Overall repricing, for non-core products, is linked to uncertainty in the occupier market.
On May 18th, most retailers reopened their stores, not without going through major changes in their operations with consequences on the shopping experience. The situation, however, is slowly going back to normality. Many tenants are asking for discounts within the limits of the closure period and the following months, showing confidence in a full recovery. Most landlords are willing to accept temporary concessions, in exchange of better conditions in the long term. The general sentiment due to Covid-19 crisis has promoted a cautious approach among investors and many deals have been postponed or put on-hold.
Although absorption figures have decreased by 18%, totaling ca. 780,000 sqm, compared to H1 2019, the Italian logistics market remained most resilient compared to other sectors, during the first half of 2020. Lombardy continues to be the driving market comprising of 45% of the total, followed by Piedmont, Emilia Romagna and Veneto. BTS is still the preferred type of development, accounting for 73% of the total area. E-commerce, GDO and pharma are confirmed as the most active sectors. Data centers are emerging as a new asset class, with both operators and investors focusing on opportunities in well-connected area on which to develop this new product. On the investment side, despite the continued mismatch between vendor and buyer expectations, logistics remains the most liquid asset class totaling over €300 million, in line with 2019 figures, and a strong investor commitment is anticipated for the second part of the year. The logistics market continued to grow in Q1 2020 following the positive trend of recent years, with take-up recording the same level of the previous two years at approx.300,000 sqm. Lombardy continues to be the region with the highest take-up representing 62% of the total; the region is confirmed as a strategic logistic hub for national distribution by many major international companies. The 3PLs continue to be the most active players in terms of number of transactions, while Retailers have recorded the largest transactions and most BTS products. In the last month, the COVID-19 emergency has generated a significant increase in online shopping, especially for food and other essential goods.