Savills’ Impact: a trio of European markets at the e-commerce ‘tipping point’

In Impacts, its global research programme, Savills highlights the disruption retailers face in servicing ecommerce demand, both in finding appropriate warehouse space in order to meet consumers’ expectations of receiving fast deliveries and tackling major issues around congestion and pollution in Europe’s urban centres.

The trio of countries will join European leader, the UK, for which all total ecommerce-driven retail sales is now 21.4%, followed by Germany at 15.1%. Among the three tipped by Savills, France is at 10%, while Netherlands and Sweden are tied on 9.5%.

According to Savills, these markets have already seen large increases in the volumes of warehouse space taken in the past 12 months and corresponding falls in vacancy rates.

In the Netherlands, Savills says supply decreased by 19% between 2015-2018 to 25.6m sq ft, reflecting a vacancy rate of 7.8%, down from 11.3% in 2013, while the vacancy rate for modern prime logistics space in Sweden is currently below 3%.

As the biggest city in the most advanced ecommerce market in Europe, Savills highlights that London has seen vacancy rates on warehouse space within the city centre drop to just 2.5% and top rents surge to £30 per sq ft as retailers compete for very limited space – a trend that is now echoed in Germany and is likely to follow shortly in France, the Netherlands and Sweden.

Kevin Mofid, head of industrial research at Savills, explains:

“11% is the magic number where e-commerce sales go from something retailers can largely manage as part of their traditional retail operations to a force that transforms the entire business. Competition for warehouse space will surge across European centres as markets hit this point but, as we’re seeing in London, lack of supply, high rents, pollution and congestion are all problems that must be addressed by technology and innovation.

“Luckily, there are already examples of this. The ‘Paris AIR2 Logistique’ at Port de Gennevilliers, France’s largest river port, should help meet the nation’s growing taste for ecommerce; this two-storeyed warehouse is environmentally friendly and allows distribution of goods via the River Seine and rail to minimise traffic movements. If others adopt similar solutions and look to address the issues upfront before they hit the 11% tipping point, it will be much easier than trying to solve them in hindsight, as London has found.” 

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