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Sergio Martínez Herrero: Precautions When Investing in Logistics in Madrid
Sergio Martínez Herrero, adviser at Teseo & Co: The logistics real estate sector in Madrid has grown exponentially, driven by the transformation of e-commerce and the need for distribution centres closer to urban areas. However, this growth carries a clear warning for investors: not every opportunity is equal, and an oversupply in certain areas, such as Villaverde, can turn a promising investment into an unnecessary risk.
The Villaverde case
For those looking to invest in logistics real estate in order to lease the assets, it is essential to adopt an informed strategy based on market analysis and responsible decisions. Below, we offer some financial and real estate pointers for investing successfully in this competitive environment.
1. Understand real demand before buying or building
Although the logistics sector has been one of the most dynamic in recent years, the reality is that not every area offers the same potential for security. Villaverde, for example, has expanded rapidly, but this can lead to saturation if the supply of warehouses for rent exceeds the market’s capacity to absorb it. It is necessary to assess the effective demand in the area of interest in detail. This includes studying occupancy rates, tenant turnover and medium- and long-term trends. An investment in a highly competitive area can mean long periods with assets standing empty without a tenant, or downward adjustments to rental prices.
2. Prioritise locations with accessibility and connectivity
Sergio Martínez Herrero explains that the success of a logistics asset depends to a large extent on its location. Although areas such as Villaverde have a strategic position, traffic congestion or a lack of adequate infrastructure can reduce the appeal of new investments. It is necessary to promote or buy this type of asset in locations that are not only close to the main distribution hubs, but also offer smooth access, both for heavy transport and for last-mile delivery. Connections to major motorways and urban roads are a decisive factor in attracting quality logistics operators.
3. Diversify to mitigate risk
Concentrating investments in areas with an excess of vacant supply, such as Villaverde, can be dangerous. Economic cycles can cause returns to fall in saturated areas, while other, lesser-known emerging areas offer opportunities with better margins. It is worth considering other logistics areas in Madrid, such as Vallecas or Vicálvaro, and looking at niche logistics assets, such as last-mile commerce centres.
4. Take a long-term view with a focus on sustainability
Logistics assets that do not incorporate energy efficiency measures, environmental certifications or innovative features can quickly become obsolete. In an increasingly demanding market, companies prioritise spaces that reduce operating costs and respect the environment. Investment funds and family offices know that it is essential to invest in assets with certifications such as BREEAM or LEED. Not only will they be more attractive to logistics operators, they will also be worth more in the future.
5. Work with a specialist adviser
Investing in logistics requires in-depth knowledge of the sector, the local market and global trends. Without the right support, it is easy to make mistakes that affect your returns. Teseo & Co is a financial and real estate consultancy specialising in advising buyers of this type of real estate asset.
Sergio Martínez Herrero has more than 30 years of experience in the real estate sector and specialises in industrial logistics. He has led companies such as King Sturge, which in its day was a benchmark, handling more than 60% of the transactions carried out in Spain between 2000 and 2010. He is currently an adviser at Teseo & Co.
