SURFING THE ON-LINE WAVE IS NOT THE ONLY THING FOR LOGISTICS
- On-line retail penetration rate in Europe averaged 6.4% in 2018 and is expected to increase to 8.8% by 2022. With the shift towards online retailing still showing potential growth, demand for logistics is set to remain solid across Europe.
- On-line sales has driven demand for both XXL and big box warehouses as well as the increased need for mid-size units. This is due to the greater need for parcel delivery has shifted part of the demand closer to urban areas.
- Our forecasts show no evident correlation so far between on-line sales growth and logistics rental growth. But with vacancy rates at their lowest across Europe, owners have more leverage to negotiate more favourable rents.
- Logistics rental growth is clearly not just driven by the wave in on-line retail sales. Other factors such as the continued focus on cost optimization of the retail supply chain and the availability and cost of logistics space also play a role.
- With occupier demand remaining solid, European industrial and logistics investment volume tripled in the last five years (2014-2018), compared to the previous five-year period (2009-2013).
- With increased competition for existing assets, investors also view development as a value-add alternative.
LOGISTICS RENTAL GROWTH DRIVEN BY MORE FACTORS THAN JUST ONLINE SALES GROWTH
Sources: AEW & Global Data
The information and opinions presented in this research piece have been prepared internally and/or obtained from sources which AEW believes to be reliable; however, AEW does not guarantee the accuracy, adequacy, or completeness of such information.