Although logistics occupiers are still focused on expansion, many are now considering alternative locations due to the prolonged imbalance in supply and demand, according to a survey by CBRE.
CBRE’s 2022 European Logistics Occupier Survey, carried out in conjunction with Analytiqa, analysed responses from more than 100 of the largest European logistics occupiers.
Occupiers across all sectors remain bullish and 73% of respondents said that they intend to expand their logistics footprint in the next three years. More than 20% of the sample plan to expand by more than 10%. CBRE said this confirms the continuation of extraordinary demand for warehouses in Europe.
Germany, France, Belgium, Italy and The Netherlands are priority markets for expansion, most of which have further e-commerce growth to come according to CBRE.
Expansion plans are, however, conditional on site availability, currently at its lowest level in Europe, and occupiers are prepared to look at alternative locations – about 54% of respondents were exploring expansion outside traditional logistics hubs, CBRE said.
Occupiers are also rethinking urban expansion plans because of the difficulty of sourcing and operating city logistics facilities. This varies depending upon the sector in question and, for instance, urban sites are still a high priority for post and parcel companies, online and omni channel retailers.
Procurement methods also reviewed
Acquisition strategies have also changed and 68% of respondents said they have to either secure sites in advance of requirements or partner with developers and investors.
Rising costs, particularly of energy and labour, as well as labour and skills shortages, remain serious concerns. The environment has become a more serious concern than it was in CBRE’s 2020 European Logistics Occupier Survey, and is now one of the top three concerns for respondents.
Rent increases remain the number one real estate concern for 37% of occupiers, CBRE said. However, because rent and service charges account for less than 10% of total operating costs for 70% of respondents, increases in labour and transport costs are likely to have a bigger effect.
Occupiers are now more willing to pay a green premium when considering new facilities. Almost two-thirds of those surveyed said that they would pay a rent premium for facilities with a green certificate.
On the other side of the coin, 11% of respondents said they would not pay a premium but would seek a discount for non-green facilities. Looking at their existing facilities, 76% of occupiers were willing to increase rents to switch to green sources of energy.
“With a vacancy rate of less than 3% on average in Europe and low levels of land availability, it comes as no surprise that occupiers have started taking new approaches to securing sites,” said Joerg Kreindl, head of occupier industrial and logistics, EMEA at CBRE. “Compromising on location in order to find suitable space and labour force is a price they are willing to pay in order to continue expanding.”