Another widely predicted structural change resulting from the crisis is the repatriation of industrial capacities and a move from “just in time” to “just in case” stock inventories. Douetil cites the example of France: “Finance Minister Bruno Le Maire said back in February that he wants an accelerated consideration of reshoring, particularly for critical industries. I think we’ll see more of that rhetoric right around the world.”
A general upsurge in nationalism has been evident across the continent in recent years. Susanne Eickermann-Riepe, Partner of Real Estate Advisory with PwC in Germany notes that many in the industry have been mindful of how this might impact supply chains. “The sector was already discussing ‘glocalisation’ instead of globalisation. It has been possible to show how fragile global value creation systems can be, and how critical points have been kept going for years by fire-fighting actions.” Such actions have taken on a new and urgent intensity as the pandemic has taken hold.
The likely consequence for cities will be greater demand for logistics hubs in densely populated urban centres. “That last mile delivery piece will be hugely important,” says Douetil. “In megacities, I think there’s a big problem in terms of the supply of potential sites.”
Tia van Beek concurs, and suggests regeneration of post-industrial districts could provide a sustainable solution to demand. “There’s an opportunity for older districts on the outskirts of cities to fill that demand. Instead of unlocking new ground, it would be very worthwhile to look at these regions. This is the “E” in ESG: let’s use brownfield instead of greenfield.”
Expanding on the ESG theme, Eickermann-Riepe notes that, “this crisis is a social crisis. If you look to research highlighting what investors want, you can already see that the social reputation of companies is becoming more important.”