Logistics property markets across continental Europe are experiencing many similar factors to what we have seen over the last five years here in the UK. Namely a surge in take-up coinciding with falling supply and vacancy rates, which in turn has driven rental growth.

Many European markets have not yet experienced the inflection point witnessed in the UK where this surge has led to the creation of more investment stock, along with increase in demand for what was previously considered secondary units.

This point was reached in the UK when online retail made up 11 per cent of all retail sales. However, the current EU average is just 8.8 per cent of online sales with some countries such as Poland at only 4.3 per cent. Despite this, business consultancy Forrester has forecasted a dramatic rise, stating that online retail across Europe is set to account for 14 per cent of the sector by 2022.

Furthermore, research from Prologis estimates that each €1 billion of additional online sales will generate around 770,000 sq ft (71,535 sq m) of new logistics demand. This translates to an extra 150 million sq ft (13.9 million sq m) of warehouse space being required in Europe over the next five years alone.

What’s clear is that this growth is already underway. Savills has tracked occupier take-up across the UK, Ireland, Spain, the Netherlands, Czech Republic and Poland, which has risen by an average of 53 per cent, taking the three year rolling average to a 10-year high across Europe. 

Consequently, this surge in demand has seen development markets struggle to keep pace, with supply in many cases falling and vacancy rates dropping to below 10 per cent.

For example, the UK has seen record speculative development announcements in 2018, yet supply has remained static reflecting a vacancy rate of just 6 per cent. A similar story has occurred in both Dublin and the Netherlands.

The unprecedented growth of online retail has seen records broken in the UK industrial sector in recent years and it looks like some parts of Europe aren’t far behind. For this reason the future looks bright for logistics as Europeans adapt to a life online.

Further information

Read more: Big Shed Briefing