What excited you about the opportunity to build an investment management business at Panattoni?

Panattoni has been partnering with investors on a deal-by-deal basis for many years so it is a natural progression to have in-house investment capabilities, with more capital under group control. There was no captive money prior to Panattoni Investment Management being established.

Partnering up Panattoni’s development business across Europe with the stability and the more cautious approach of institutional investors felt like a really interesting challenge for me.

There’s always this slight love-hate relationship between investors and developers – with the development side perceived as quite risky and many investors seen as wanting to avoid risk. So it’s about connecting the returns that developments can provide with a low-risk approach for those more risk-averse institutional investors.

Panattoni is carrying out a 77,000 sq m speculative development near Magdeburg in Germany

Things are progressing very well, even in the few months that I’ve been here. The rationale behind setting up the business was driven by investors saying: “We would like Panattoni to have a discretionary fund management platform we can invest with.” Fundamentally it’s about broadening the number and type of investors, who can invest alongside Panattoni, and grow the Panattoni development business across Europe.

What type of investors are you targeting?

I am targeting a range of investors who are not currently serviced by Panattoni –  whether it’s smaller investors, who might come into a pooled fund structure, or larger investors, who don’t have the deal execution capability or the portfolio management capability in-house. So they’re looking to outsource that into a discretionary, or sometimes non-discretionary, investment management service.

We are already in discussions with North American, European, Far Eastern and Australian investors. Some talks are in advanced stages.

So will you offer these investors a wide range of investment products?

Yes – from separate managed accounts to joint ventures and pooled fund structures. The logistics market remains well placed and investor demand is there. We have the ability to develop assets and then hold them long term on behalf of investors. So we’re able to bring together development and long-term, stabilised core strategies.

“We will be growing the business this year in terms of headcount and we’ve got a number of opportunities coming in. We’re hopeful that we will be up and running in due course this year”

We will be growing the business this year in terms of headcount and we’ve got a number of opportunities coming in. We’re hopeful that we will be up and running in due course this year.

Will you target acquisitions of both standing assets and developments?

Absolutely. We are keeping our options open. The reality is that we expect a majority of the acquisitions to come through the Panattoni development pipeline. It’s very significant, with exposure to all the major European markets and some minor markets as well.

Panattoni Park Arboga in Sweden

Access to product is one of the key selling points that we have through our investment management platform. And it’s meeting demand from investors whom we were not able to service appropriately before Panattoni Investment Management was established. They know that we operate in the best markets and build very high-quality, green assets. That’s what they want.

Which markets will you target?

I’m generally country-agnostic. However if you were to ask me today for a long-term investment strategy, I’d be focusing on the core markets, with supply-demand imbalance from the land perspective and strong tenant demand. But there are also more adventurous strategies. We’ll be looking at some of these other markets where the supply side is more relaxed but where you get higher returns, such as Hungary and Slovakia. That may well be more for a develop-and-sell strategy rather than a develop-and-hold strategy.

We’ll always favour the very deep and supply-constrained markets, such as Germany, the Netherlands, the UK – and also prime markets in France, Spain and Italy. And within any country there are better regions and less good regions. You look at the UK and say: “The UK is brilliant” but no one’s going to be investing in logistics in northern Scotland. It’s the same in Germany and it’s the same in the Netherlands. So it’s also about looking at the fundamentals of the asset, the demographics and the infrastructure.

But will you still offer country-specific strategies?

Absolutely. One of the benefits of the big platform is that in any of these core markets, we will be able to provide a solution. If we wanted to just do a Nordic strategy, our teams in Denmark and Sweden would be able to deliver that.

What do you make of the current state of the logistics market?

Those of us who have been around a little while understand that things take some time to stabilise after a correction. Inflation and interest rates are now settling, giving the market more certainty and stability, but it takes longer for valuations to reflect the longer-term, forward-looking views of investors.

However, I do feel we’re getting there. There’s more alignment in the market and more opportunities. Some vendors are more pragmatic than others. Having been talking to the development teams across Europe about land availability and pricing, there’s more acknowledgement by vendors of the big macroeconomic changes that have happened over the last two years, and hence more pragmatism in reflecting this in land prices.

The macro factors from the occupational side remain unchanged. Nearshoring is becoming a really big thing because of the geopolitical issues leading to supply chain insecurity. I was in Poland a couple of weeks ago and the Polish teams there are seeing a lot of Far Eastern manufacturers now moving their plants back to Europe from the Far East. This is driving demand, particularly in the eastern and southern fringes, because the labour costs are more appealing there. And it’s not just get the benefit of a large manufacturing site, it’s all of the spin-off businesses that are attracted alongside.

We haven’t talked about e-commerce as well but e-commerce growth will continue to be strong in Europe.

The other global, long-term trend is sustainability and greenfield developments. This, again, is prevalent all across Europe. It started in the Netherlands, Germany, Nordics, UK, and is spreading out through France, Spain, Italy, and further east into Poland, the Czech Republic, Hungary and Slovakia. The leaders of this – typically the Dutch and Germans – are seeing extremely tight or virtually no land supply or land release of green belt. I think within the next five years there will be an absolute prohibition on any greenfield development. It’s all shifting to brownfield. There’s going to be a lot of competition for that land – not just logistics, we’re talking housing, retail, agriculture.

The Southern European logistics markets have been performing very strongly. How much of a focus are they for you?

The Italian and Spanish markets are indeed very strong. In Spain, our teams are based in Madrid and Barcelona, but we’re also looking at opportunities in Valencia and Malaga. However, the fundamental drivers of the Spanish market are Madrid and Barcelona.

In Italy, we’ve got a team in Milan. The northern slice of Italy is one of the wealthiest areas in Europe per capita so we’re active there. Similarly, Rome has been a real growth market and we continue to see opportunities around there, led by occupier demand. Fundamentally, it’s all about the micro markets.