Rising levels of ecommerce, across all European markets tracked by Savills, has helped to create unprecedented levels of demand from occupiers across Europe.
In markets such as the UK, the Netherlands, Germany and France, where over 10% of all retail sales are made online, take-up levels stood at 1.5m sq m, 2.0m sq m, 2.9m sq m and 1.4m sq m respectively, as growing demand from retailers continued to shape the upwards trajectory.
The key sectors driving demand have generally been from the logistics operators, ecommerce and the manufacturing sector. Savills’ expects European logistics take-up demand to continue to gather pace, as both third party retailers and ecommerce operators expand their offer.
Vacancy rates continue to fall across Europe, particularly in the core markets. Savills says it expects this to add further to rental growth prospects in the short to medium term, as limited new speculative developments are unable to keep up with the growth in demand across the majority of markets.
Marcus de Minckwitz, director in the regional investment advisory division, Savills EMEA, explains:
“While countries such as the UK, Germany and the Netherlands continue to attract the most interest, we are seeing a huge uptick in logistics activity across Iberia and CEE, as the European distribution network further grows.
“And, as vacancy rates continue to fall across Europe, particularly in core markets, we expect to see further rental growth in the short to medium term as development is unable to keep up with the growth in demand across the majority of markets. This will be most felt on prime assets in strategic locations, near major highways, ports and airports, with competition for these locations more fierce than ever before. The clear need for occupiers to have a presence in these locations therefore attracts significant investor interest, which is driving prime pricing to record levels.”
Although the UK and Germany reported weaker performances (-19% and -18% respectively), shaped by a lack of appropriate product on the market, countries including Sweden (+91%), Poland (+83%), Czech Republic (+80%) and Norway (+16%) all exceeded their five-year H1 average investment volumes.