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Logistics is our lifeline to the future: Belgium at the crossroads

  • Belgium
  • Real estate
  • Real estate development and regeneration - Real estate briefing
  • Real estate planning
  • Real estate sector
  • Shipping, Ports and Logistics

07-10-2021

Logistics is the lifeblood of a modern economy. Belgium, like other developed countries, now sees secure supply chains as vital to its national security. The pandemic taught us that, without a vibrant logistics network, modern economies die. This lesson has not been lost on international logistics investors and their platforms. They are surging into Belgium and pursuing the compelling opportunities offered by this asset class.

We look at the many commercial and legal issues we can help you with in the Belgian logistics market.

Logistics sites big enough for large sheds are rarer than mice in a cat basket. Even when developers find them, they may also discover outdated planning regimes shackling a market craving more logistics’ capacity. However, it’s easier for newer schemes (categorized as ‘Spatial Implementation Plans’ (SIPs)) because these can be approved by a competent authority. “Last mile” space is logistics’ new growth frontier. Finding and unlocking development land for these niche sites, close to or within urban areas (with their growing contingent of home workers), is crucial to the future success of logistics supply chains. It requires careful and creative planning advice. It doesn’t end with planning. A plethora of other permits are required and vary by region: including urban planning, building and (for some classified sites) environmental permissions. Logistics sites inevitably bring heavy traffic. Developers need to be ready with a solution for local communities (who may challenge their scheme) and negotiate carefully to balance local amenity with operational freedom.

Some people think logistics warehouses are just big boxes. But the latest versions of them are sophisticated hi-tech “space ships” showcasing state of the art energy saving, AI, mezzanine and automation innovation. As the complexity of these buildings increases, so does the construction and real estate expertise needed to deal with the 4-D chess of their inter-locking building contracts and infrastructure including roads and utilities.

As we move away from a petrol-driven economy, logistics developments are increasingly situated around rail freight and waterway terminals, and not just alongside motorways or airports. These transport-led developments require precise and strategic advice on the relevant transport regulations and the necessary shared structures and the asset protection agreements with the infrastructure authorities.

Due to the intensive upfront capital outlay these buildings demand, lease terms in the logistics market tend to be longer than leases in other sectors. A long lease (>9 years) is often the norm, but linked to customer contracts and business flow by break rights and renewal options. Dealing provisions in logistics leases are also more generous than in other sectors, for example, allowing group sharing and relatively free underletting.

In Belgium, for everyday leases (including logistics ones) rent reviews have to be expressly negotiated in. Rent is, however, usually adjusted on an annual basis in line with a specific consumer price index (the so-called ‘health index’).

Finally, but most importantly, combatting climate change now flows through everything logistics businesses do. Logistics players are striving to reduce their carbon footprint by investing in energy-efficient buildings: using green delivery solutions such as bicycles and electric vehicles for first and last mile deliveries: and encouraging green initiatives among their supply chain partners. Everyone now knows: there is no point delivering parcels post haste, if you are destroying the planet while you do it.