Factory space is Europe’s next hot commodity

Industrial space in Europe is at a premium as global tensions accelerate a ‘near-shoring’ trend for manufacturers.

Companies bought or leased 29% more space in Europe last year compared to the year prior. And it seems there’s a mix of factors at play:

• 🚀 Online shopping has driven demand for logistics space
• 🦾 Automation is cutting some operating costs in Europe, and
• 💰 Governments are offering incentives to companies.

But Europe’s near-shoring journey is still rougher than a Ryanair red-eye:

• 📈 Higher energy prices have left some activities non-viable
• 👷 Firms are struggling to find the right manufacturing skills, and
• ⚖️ The gains are uneven (central and eastern Europe benefit most)

Plus, a key Euro-area manufacturing index just hit its lowest point since 2020, suggesting there’s a lag between renting space and actually using it (not to mention a broader economic slowdown).

Intrigue’s take: The ‘shoring’ buzzwords have been crushing it lately: near-shoring, friend-shoring, right-shoring, re-shoring, on-shoring.

But they all basically point to the same thing: a spooked world securing supply chains and reducing its reliance on China. And yet, China is now exporting a trillion dollars more to the world in goods each year than before COVID.

So the world may need even more ‘shoring’. Or more time. Or both.

Also worth noting:

• A global manufacturing index has now signalled a drop in worldwide goods exports for eight straight months.
• France pitched a ‘Made in Europe’ industrial strategy to the European Commission earlier this year.