Build-to-own logistics schemes to gain momentum post Covid-19

by   CIJ News iDesk II
2020-05-25   09:41
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The Covid-19 pandemic has caused chaos across the global economy. Within the commercial real estate market, logistics has weathered this storm better than other sectors, allowing planning of new developments to gradually resume following price corrections. Changes in financing conditions for real estate development may alter the new supply structure, with a likely increase in demand for BTO (build-to-own) and BTS (build-to-suit) development projects and a decline in speculative schemes, according to Axi Immo. “We expect an increase in demand for space developed in a BTO formula. Clients as owners of warehouses will have more freedom to decide how to use their properties in these new market conditions. Moreover, by using their own capital to develop their warehouse they won’t need to apply for a banking loan,” said Marek Kosielski, BTS director at Axi Immo. “Developing a property through a BTO formula does not exclude the option to lease the building in the future, in case of a change of strategy, the owner can decide to sell the building to a financial institution through a sale-and-leaseback transaction whereby he or she becomes a tenant in that same building. This solution allows companies to free capital that they have tied up in their real estate and reinvest it into their business.”