Profile of a Swiss logistics sector in the midst of transformation

Swiss logistics activity represents more than CHF 40 billion, or over €42 billion. Nevertheless, the sector faces major challenges, including a shortage of land, limited availability of storage space and road corridors that are nearing saturation.

In Switzerland, industry experts describe the “ rise of logistics ” as a positive consequence of the Covid-19 crisis. This trend can be seen in a real estate market undergoing major change. “ Studies and forecasts point to transport flows growing by around 30% by 2040. This will have a direct impact on the entire logistics sector, and therefore on dedicated real estate ,” confirms Bruno Guandalini. As the president and founder of PILM, a company specializing in logistics, industrial and office real estate, he knows this market well.

In Switzerland, as elsewhere, the pandemic disrupted consumer habits, boosted e-commerce and, with it, the logistics sector. To attract and retain customers, suppliers are working to increase product availability, speed up shipment preparation and improve transport routes. DPD Switzerland, the parcel-business subsidiary of the French public group La Poste, is evidence of this successful strategy. To meet demand and support its growth, the company, which already operates 11 depots, did not hesitate to invest in a new site in Bern. Meanwhile, Swiss Post opened a brand-new sorting center in Utzenstorf (30 minutes from Bern) in 2023 to better handle 750,000 to 900,000 parcels a day. And that is not all: regional parcel-center projects are being considered in Buchs, Pratteln and Rümlang.

Faced with the significant cost of new construction as well as the scarcity of available land, industry professionals are increasingly turning to existing industrial buildings for conversion into warehouses. They must also contend with stronger competition from investors who see this asset class as an opportunity to diversify their real estate portfolios, in addition to residential properties and offices. “ Swiss players are adapting because land here is scarce and therefore expensive! As a result, depending on the region, the cost per square meter ranges from CHF 150 to more than CHF 1,000 per m² in industrial areas. Rents are also rising, particularly in urban areas, even though most owners use their own commercial logistics buildings and spaces for their own needs. In any case, it is better to own, since investments are depreciated over 50 years ,” advises Bruno Guandalini.

Given the scarcity and high cost of land, new projects are combining several activities to develop business-hotel-type facilities. It is therefore not unusual to see several floors of workshops, offices and parking above a logistics platform that may itself span several levels. This kind of mix is prohibited in France. “ Mixed-use development is on trend, to optimize the use of space. As a result, alongside traditional logistics platforms, multimodal and multifunctional centers are seen as a solution for the future,” he says. Prices are not the only constraint facing the logistics sector. Swiss specificities often make project development more complex, as the president of PILM explains: “ In each canton, local residents hold the power. They can oppose and block a project through objections or appeals. There really has to be a consensus among residents, elected officials and local economic stakeholders. In that respect, it differs from France, where it is often enough to have the support of the mayor or local authorities, without any real prior consultation with residents on projects. Here, municipalities scrutinize projects very closely and do not want to take any risks.” Power rests with the people.

Is the Swiss logistics sector thriving? Without a doubt. But its infrastructure still has to be located wisely. The region between the A1 and A2 highways, around major urban areas such as Zurich, Geneva, Basel and Lausanne, remains the heart of activity, with a high density of logistics buildings. “ There is a significant number of logistics properties in the Basel–Solothurn–Zurich triangle ,” confirms Bruno Guandalini. This interest in proximity to urban centers is explained by the need to deliver ever faster to consumers demanding ever shorter lead times, but also, above all, by population growth (and therefore the number of potential customers). Switzerland has thus grown from 8 million to 9 million inhabitants over the past 10 years. Yet cities and their outskirts do not have enough room for everyone. Compromises are necessary… Unable to expand outward, owners are choosing height. Cubic meters are as important as square meters, with the aim of building ever taller structures. 

Environmental issues are indeed being tackled head-on by stakeholders in the sector. Logistics service providers, shippers and real estate owners… are not hesitating to invest and multiply initiatives to make their activities carbon-neutral. Added to this is a significant share of buildings constructed around 40 years ago that do not meet recent standards. Several levers have been identified to “ green ” logistics activity, including the use of clean vehicles for transport services, with particular attention to “ green ” hydrogen, although supply is problematic because of Switzerland’s highly dispersed network of gas stations. Installing charging stations for electric vehicles and bicycles is another solution, as is better building insulation. Rail is another alternative: Swiss retail group Migros, for example, has favored rail transport for decades, aided by regulations governing access to city centers. The goal is to reduce CO2 emissions from road freight by 70% by 2030. For its part, the city of Geneva is testing three nano-hubs (small containers) in several neighborhoods to reduce the impact of truck rounds. Finally, the use of heat pumps has become widespread, as have the installation of photovoltaic panels and solar thermal collectors, and the planting of vegetation around buildings and on rooftops. 

This environmental commitment is also driven by increasingly strict and demanding regulations. “ While the concept of a classified site does not exist in Switzerland, project developers nevertheless have to carry out numerous preliminary studies, notably to assess risks before obtaining authorization to install a platform. That is why, while projects are completed within two or three years in most European countries, in Switzerland it takes closer to five or six years,” the president of PILM qualifies. Swiss authorities are also committed to cleaner logistics. Acknowledging that roadways are nearly saturated and in light of forecasts by the Federal Roads Office and the Federal Office for Spatial Development projecting a 37% increase in freight-traffic density by 2040, Switzerland is getting organized. The Federal Council is considering expanding the A1 highway, Switzerland’s longest, from four to six lanes between Bern and Zurich and between Geneva and Lausanne. In addition, broader consideration is being given to modernizing the rail network to develop rail freight, which currently accounts for only one-third of transported volumes.

Congested roads and difficulties building new surface infrastructure were enough for a group of investors to imagine “ a kind of subway reserved for freight ” to deliver “small-sized” goods. Named “Cargo sous terrain” (CST), this new link will connect the country’s major distribution centers with its large cities. The project’s legal framework was approved by the Federal Council and the Swiss Parliament in 2023, meaning that the first line is expected to connect the Egerkingen-Härkingen (SO) industrial site—where La Poste, Migros and other companies have warehouses—to Zurich in 2031. It will do so through a series of triple-lane tunnels stretching around 70 kilometers. The main problem is not technological but human. Shippers face a labor shortage. This is good news for cross-border workers, who hold 100,000 of Geneva’s 360,000 jobs. The same is true in Basel. This explains why, beyond recruiting abroad, Switzerland is betting on process automation. It is common to encounter autonomous robots in warehouses, excellent at repetitive tasks, carrying heavy loads and storage!