The monitoring of industrial properties made by SiiLA shows that 75% of the more than 21.6 million square meters of existing warehouses are still concentrated in the states of São Paulo, Rio de Janeiro, and Minas Gerais.

The e-commerce boom has made companies aim to deliver quicker. And an important step to optimize this process is to install logistics operations close to consumers. With an eye on this movement, many developers are investing in real estate in different regions across Brazil.

Only in the second quarter of 2022, Bahia, Ceará, Rio Grande do Sul, Santa Catarina, Pará, and Pernambuco gained new spaces for logistics, along with the states of Rio de Janeiro, Minas Gerais, and São Paulo.

LOG Commercial Properties (LOG CP) is a player investing in this decentralization movement. The company develops and manages logistics assets with over 14 years of experience. To better understand this movement and the reasons that are leading LOG to bet beyond the axes of greater logistical concentration, the SiiLA newsroom interviewed Guilherme Trotta, Commercial Director of LOG CP.

Based in 18 Brazilian states, in addition to the Federal District and 39 cities, LOG has more than 1 million sq meters of gross leasable area (GLA) built and is executing an ambitious expansion plan, called "All for 1.5", in which it intends to more than doubling in GLA, adding another 1.5 million sq meters to its portfolio by the end of 2024.

LOG's first business was built in Contagem (MG), and currently, the company operates in all Brazilian regions. "LOG has been working to take the development of warehouse logistics infrastructure to Brazil; we were born with this purpose", according to him.

Trotta detailed the "All for 1.5" plan, originally launched in 2019, as "All for 1" to develop another 1 million sq meters by 2024. "Driven by the growth of e-commerce and fly to quality, which is a movement that leads us to act more and more in all regions, we understand that the goal was feasible to be achieved and that 1 million ended up becoming 1.5 million sq meters".

According to the executive, LOG is already close to reaching the goal and plans developments for 2025 onwards. "Our growth is being directed to places where we already have and still have the potential to develop new projects, such as Espírito Santo, where we have Viana II and Viana III already mapped. We have acquired a plot of land in Campo Grande and are currently in the process of developing and approving the project", he added. Trotta also mentioned LOG's plans in cities in the interior of São Paulo, such as São José do Rio Preto, Ribeirão Preto,, and São Bernardo do Campo.

In the final stage of construction, Log Viana II is mapped by the SiiLA Market Analytics platform. The project has an estimated GLA of more than 67 thousand sq metres in Viana, Espírito Santo, and should be completed this month. The excellent moment in logistics is reflected in the pre-lease of the warehouses, which is already almost 50% pre-leased even before being delivered to key players in the e-commerce and cleaning and hygiene segments.

According to the company's Commercial Director, LOG has delivered approximately 75 to 80% of its pre-leased logistics warehouses. According to Siila's CEO Giancarlo Nicastro, expectations are good for the development of the logistics market throughout the domestic territory: "Brazil is a country with continental dimensions, and it is natural for companies to invest in taking this product throughout the country, especially where there is population concentration and strong economy".

Future stock

According to SiiLA's monitoring, the volume of new stock in 2022 should exceed deliveries in 2021. Last year, the market closed with 1.1 million new sq meters. At the end of the first semester of 2022, this number was already at 1.074 million sq meters, and SiiLA monitors another 2 million planned to be delivered later this year.

Behind the scenes of the Real Estate market, analysts debate the thesis that the reheating of physical retail sales combined with the trend of stabilizing online sales may reduce the appetite of major e-commerce players to lease new areas. However, this new market moment should not affect LOG's plans.

"We see e-commerce suffering a little in 2022 compared to 2021, but there is no movement to stop investment from these companies in Brazil. Quite the contrary, giants like Amazon and Mercado Livre are positioning themselves with new operations," said Trotta. According to him, the segment is going through a phase of adjustment and should not slow down the occupation of future stock. "E-commerce continues to be the main driver of LOG's growth throughout the country", he said.

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