Cushman says a combination of a shorter construction period when compared to office and retail assets and the emphasis on cost-efficient supply chains, makes the logistics sector more quickly adaptable to changing market conditions and structural trends.
While the average size of warehouses will indeed continue to rise, not all large space enquiries will require new construction. In fact, many institutional-grade buildings can probably be adapted to accommodate most requirements. Given the observable impacts that are already changing space requirements, occupiers and investors alike need to pursue opportunities that offer flexibility and to some degree future-proofing.
Bigger warehouses are being built and e-fulfillment centres need to be a larger size to be efficient than previously seen, Cushman says, with further segmentation in warehouses and e-fulfillment expected for the logistics market.
Cushman’s four key messages for the retail sector heading into 2020 comprise:
- Larger (XL & XLL) buildings – to fulfil a maximum number of requirements, larger buildings will remain important. Existing buildings will be lauded if they offer opportunities to enlarge (either horizontally or where permitted, vertically) and / or offer extra high ceiling heights to take advantage of M3 expansion possibilities.
- The cost of the last link will see an increasing demand for assets that are closer to the consumer / final recipient.
- As the voracious appetite for e-commerce and next day, same day, next hour delivery continues, there will be increasing levels of competition for the ‘best’ sites.
- Greater levels of analytical rigour will be undertaken to understand exactly how distance / location / time / expectation all work together to highlight the optimum location to address particular needs.
Andrew Phipps Head of EMEA Research at Cushman & Wakefield:
“Logistics space requirements will depend on how occupiers choose to take advantage of key structural drivers, a trend towards urban living, e-commerce growth, transformation of supply chains and appetite to invest in the sector. Since the emergence of the European logistics property sector almost 20 years ago, structural trends have fuelled demand for space in the absence of any meaningful economic growth.”