Data centers and logistics are the bright spots. With increased reliance on cloud services, online communication, and data storage businesses require robust infrastructure to support operations. Consequently, the data center industry has seen a surge in demand for space, leading to the expansion and construction of new facilities to meet growing business needs.
The pandemic also accelerated the growth of e-commerce, resulting in a heightened demand for logistics and warehouses. With a shift in consumer behavior towards online shopping, retailers and logistics providers had to adapt their supply chains to meet increased demand for home delivery, which fueled the need for strategically located warehouses and distribution centers to efficiently handle inventory management, order fulfillment, and last-mile delivery. While this trend has since moderated, the shift away from “just-in-time” inventory management towards maintaining larger stocks as a buffer against future supply-chain disruptions will also benefit the logistics sector, although in very specific locations. The call could be made for the broader industrial real estate, but the elements available for evaluation are relatively limited. Europe has understood that it needs more factories as a strategy to tackle economic challenges while aligning with green goals. Strengthening industries will enhance competitiveness, generate jobs, and drive economic growth while also incorporating sustainable practices.
Hotels are recovering from the pandemic hit, and retail is set to remain the most fragile. Prior to the pandemic, hotels experienced a period of robust growth and prosperity: even major cities in the Eurozone witnessed a surge in hotel construction (or repurposing) and occupancy rates remained consistently high even with the surge of other competitors (e.g., Airbnb). Following the dramatic decline in tourism during the pandemic, occupancy has been gradually rebounding especially in Spain and France (Figure 8), and the outlook remains positive as the sector is adapting to technological change and evolving traveler preferences. In contrast, the retail sector may never recover from the rise of e-commerce, as particularly younger consumers have shifted spending patterns towards shopping online (Figure 9).
