The European logistics market is on track for a record year, with investment volumes and take-up activity above the five-year average, at the half-year point.
As Europe’s population increasingly shops online, the ongoing structural shift from retail to warehouse space is gaining momentum. More than half a billion Europeans have shopped online over the past year. By 2025, Europe’s e-commerce segment is forecast to reach almost US$570bn value, driving a significant portion of warehousing demand.
Germany has always been the largest European logistics market, benefitting from its central location on the continent. It is home to some of the most globally active freight forwarding, warehousing and fulfilment companies. Every listing of the top ten logistics players in Europe shows up to half a dozen logistics companies originating from Germany.
Having shaken off the impacts of the COVID-19 pandemic, in the first six months of 2021 the German market for warehousing and logistics space registered a record take-up volume of around 3.88 million sqm for the first half of the year. Approximately 1.11 million sqm of space was taken up in the first six months in the ‘Big 5’ markets (Berlin, Düsseldorf, Frankfurt, Hamburg and Munich), 25 percent more than in the same period last year.
Despite enjoying strong economic growth in recent years, Poland remains a much cheaper option when renting or building warehouse space, which has spurred a proliferation of logistics developments. Take up in Poland for H1 2021 was over three million sq. m. – higher than in France, the UK and Spain.
Poland is strategically positioned as a gateway point for the ‘Belt and Road Initiative’, which has created the opportunity for the country to become a key conduit for trade between China and Europe.
The Netherlands has become a critical supply chain link for the whole of Europe, defined by high quality, multimodal logistics infrastructure coupled with a skilled workforce. Around 300 million consumers can be reached within a 500-kilometre radius, explaining why it such a hotspot for warehouse demand.
In particular, high demand for warehousing is currently being seen in the Netherlands from UK companies looking to bypass some of the negative impacts of Brexit, including port delays, extra freight costs, new VAT and customs fees.
Dublin is the main market for warehousing in Ireland, however, take-up has remained fairly subdued due to the ongoing impacts of COVID-19. Around 428,000 sq ft of take-up was transacted in Q2 2021, a decline of five percent compared to Q2 2020.
Ireland has also had to contend with the challenge of changing trade dynamics due to Brexit, with the value of imports from Great Britain declining by 35 percent in the first five months of 2021 compared to the same period in 2020. Irish importers pivoted to the EU, with the value of EU imports increasing by 17 percent year-on-year over the period.
France is a large industrial market within Europe with many international players active in the freight forwarding and warehousing sector. Supported by its high-speed rail network, France’s infrastructure is strong relative to other comparable markets, further encouraging local warehouse and logistics investment.
Despite the tailwinds of the COVID-19 pandemic, the French logistics market is in good shape, supported by strong demand from e-commerce. New builds and build-to-suit facilities have been most popular, accounting for the lion’s share of take up.
The Spanish logistics market’s good performance has continued into 2021, with a lot of activity in big box formats. E-commerce is the main driver of logistics demand. Logistics leasing activity in the main centres of Madrid and Catalonia during the first three months of the year significantly exceeded that of Q1 2020.
Italy has a globally connected economy and is geographically well located by the Mediterranean Sea. As one of Italy’s densest and wealthiest population centres, Milan is Italy’s prime warehousing location. Domestic consumption, global trade and rising levels of e-commerce are the key sources of demand for logistics services.
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