The ‘last-mile’ property segment of the logistics market continues to see intense activity.
On Tuesday (15/2) the private equity fund Blackstone announced its was recapitalising its ‘pan-European last mile logistics company’ Mileway, which owns a complex of fulfilment properties around Europe. Calling it the “largest private real estate transaction ever” Blackstone and some of its partners will bring the capital value of the company up to €21bn, although Blackstone did not state how much cash will be pumped into the company to achieve this. Mileway certainly is large, owning 14.7m sq m of “last mile logistics assets” in 1,700 locations across ten countries in Europe. Blackstone’s James Seppala, Head of Real Estate Europe, stated that that “logistics is one of our highest conviction themes globally and the sector continues to prove its resiliency and strong growth potential”.
And Blackstone is not alone in its investment focus. Maersk’s newest $1.1bn acquisition is Pilot Freight Services which describes itself as a “North American facilities-based transportation network of 87 stations and hubs through which freight is transported and distributed to end customers”. Outsourcing much of its transport requirement, Pilot is focussed on property as its key asset base to compete in the last-mile sector.
The reason for this burst of activity is illustrated by the most recent news from the French retailer Groupe Casino and the logistics technology provider, Ocado. Announcing a new joint venture to build more automated customer fulfilment centres, the two companies said that they perceived a “significant and growing demand for online grocery services across the French market, creating a huge opportunity to leverage their combined expertise, including Ocado’s UK experience providing multi-retailer CFCs”. Note that Casino referred to “multi-retailer CFCs”, so it seems both these companies ambition extends beyond Casino’s luxury food market.
Of course, up until now Ocado’s CFC technology has been focussed on creating large dedicated fulfilment centres, but Ocado is rethinking its approach, articulating what it calls “Ocado Re:Imagined”, which seeks to adapt its technology to “faster through more cost-effective, simpler, more flexible buildings, with a faster time to go live”. This implies that the types of logistics property used for fulfilment in the future will be smaller, more localised and less dedicated facilities, which is something that Amazon has been trying to achieve for a couple of years now, but with greater opportunity for automation. The result is likely to be a new burst of change in the logistics property market as property developers scrabble to deliver such locations to retailers and their logistics suppliers.
Source: Transport Intelligence, 17 February 2022
Author: Thomas Cullen