2017 trends in European Logistics Real Estate
BNP Paribas Real Estate’s research department combines international know how and local experience to follow trends in logistics real estate projects in Europe. In its H1 2017 market research report, the department highlights growth in the sector across Europe, boosted by the development of e-commerce. Analysis by Vincent Robion, Head of Research-Logistics Europe at BNP Paribas Real Estate.
Eurozone: A market that favours logistics growth
The Eurozone economy experienced steady expansion in the last year, with volumes increasing for 17 consecutive quarters. This favourable economic environment has accelerated exports, retail sales and consumer spending. Mega-warehouses have sprouted across Europe and include increasingly automated and versatile warehouses. During the 1st half of 2017, take-up for warehouses over 5,000 sq m rose by 22% in the 21 cities regularly followed by BNP Paribas Real Estate. Supply is barely keeping up with demand, resulting in an increased demand for owner-occupier deals. While the two leading markets for take-up are the Greater Paris region and the Midlands, the occupier market has been particularly buoyant in Spain and in the South Netherlands this year.
Financial liquidity remains abundant as investors continue to show interest in logistics markets across Europe with over €15.8 billion in investments recorded during the first half of this year.
European Industrial & Logistics Investment Market in H1 2017:
- In Germany, the volume recorded in H1 exceeded historical levels of logistics real estate investment. For the first time ever, the German industrial and logistics market recorded higher volumes than in the UK.
- In Spain, the market continued to thrive with the volume of industrial and logistics investment reaching €480 million in H1.
- For its part, the UK market increased significantly, despite scarce products and political uncertainty marking the first half of the year.
- At the same time, France experienced a weakened activity in the face of uncertain presidential elections. In the second half of the year, the market is expected to increase significantly.
- In the Netherlands, the industrial and logistics market reached nearly €1.1 billion, about 18 % of the total volume of commercial real estate in Europe.
Logistics and e-commerce: Moving forward
BNP Paribas Real Estate logistics experts credit the expansion of e-commerce for the increase in logistics real estate projects across Europe. E-Commerce Europe reported a double-digit growth rate over the past few years. For the logistics real estate industry, this means a shift in strategy to accommodate increasing demand.
“In the last ten years, the number of European households purchasing items online doubled. The logistics growth we’re seeing is a direct consequence of rising consumer demand for online goods. E-commerce retailers have had to adapt: building mega warehouses outside of major cities, and updating their supply chains for more effective distribution in urban centres. And all of those changes require efficient logistics real estate management.”
Vincent Robion, Head of Research - Logistics Europe