Online retail sales as a proportion of total retail sales in the Nordics currently hover around the 10.7% mark (Denmark 11.3%, Sweden 10.5%, Norway 10% and Finland 11.4%) – the inflection point at which in the UK, Savills observed a rapid acceleration in occupier demand for logistics space. Logistics investments in the Nordics totalled €4bn, 8% up on last year, which is mainly thanks to a record level of activity in Sweden. The sector accounts for 15% of the total Nordic investment volume, against 13% last year.
Mike Barnes, associate, European research, Savills, says:
“Strong ecommerce fundamentals and rising trade have ultimately created more demand from operators for logistics space, lowering vacancy rates across the Nordics. On the European stage, vacancy rates in Oslo (5.2%), Stockholm (4%), Helsinki (3%) and Copenhagen (2.1%) feature among the lowest rates of the European cities as at Q3 2019.”
Marcus de Minckwitz, Director, Regional Investment Advisory EMEA at Savills, says:
“Investor demand for logistics space strategically located near container ports in the Baltic and North Sea including Bergen, Gothenburg and Helsinki has been resilient. Likewise, smaller distribution sites in close proximity to road and rail are likely to benefit from the inflow of goods from mainland Europe. For example, Malling & Co’s investor survey indicates that 50% of investors are looking to increase their exposure to Norwegian logistics over the next 12 months, whilst 40% will maintain current levels. We have seen aggressive inward yield movement for logistics space over the past 12-18 months across Europe, however the Nordics markets still appear relatively cheap compared to their European counterparts. Over the next 12 months, we expect rents to increase and yields to harden across the region.”
Logistics demand has come at the expense of the retail sector, for which lacklustre investors’ interest is deepening. Nordics retail investments totalled €2.4bn during the first nine months of the year, 17% down on 2018. Hence, the retail market share in the Nordics is currently 9%, compared to 15% in Europe.
Relatively high levels of retail floor space per capita in the four countries (1.38 sqm/capital – 1.16 on average across Europe) and strong growth of online sales compared to the European average are particularly restraining retail activity in the region.