Paris best city in Europe for last-mile logistics investment

Paris tops the European Urban Logistics City Ranking, according to new research published by ESR Europe, thanks to its strong consumer base and its high scores in the business environment, sustainability and labour market categories.

“Our European Urban Logistics research focuses on factors that are fundamental considerations for investors in the urban logistics ecosystem”, said Henry Giles, managing director, fund management, ESR Europe. “It showcases those cities with easily accessible urban population clusters, thus presenting an opportunity for last mile investment strategies.”

Henry Giles.

ESR’s Urban logistics city research identifies the top cities for urban logistics investment potential across Europe, as well as the micro-locations within them expected to outperform.

At a city level Paris was closely followed by key European gateway cities such as Frankfurt, Madrid and Dusseldorf. At a country level Germany, France and the Netherlands dominate the rankings, with Germany on top because of its many cities, its population density, interconnectivity and wealth.

The research team evaluated 150 sub-markets across eight Western European markets, excluding the UK, to identity the markets with the greatest supply and demand imbalances, and therefore potential for rental growth in urban logistics rents.

Source: Urban logistics city research, ESR Europe

ESR Europe looked at six main categories: supply, consumer base, business environment, labour market, supply chain and sustainability.

Supply encompasses stock within a market, land availability, sustainable buildings, vacancy rates and rental growth, and also takes into account the number of Amazon locations, regarded as an indicator of the dynamics and demand for last-mile delivery services.

The consumer base is defined by structural demographic drivers, such as the catchment population as well as their income and spending patterns, including e-commerce sales.

The business environment is defined by the economic output of each market and the ease and costs of doing business there, taking into account operational stability, corporate tax rates and the local contribution to the economy from manufacturing, transport and storage and retail.

The labour market category focuses on the availability and cost of the local workforce, the average wage and minimum wage and the labour law protections in place.

Supply chain is defined by the ease of moving goods within the country and the local transport infrastructure, looking at transport infrastructure investment, quality of logistics services, the volume of road and seaborne freight and the number of ports.

Finally, sustainability looks at the risks related to climate change and energy security, taking into consideration the percentage of a country’s area devoted to economic activities exposed to wind or floods and the ability to provide sustainable energy as well as the share of renewable energy in the country’s total energy consumption.

“Our research underscores the dynamic and evolving nature of the real estate investment landscape,” said Stuart Jackson, head of private markets, ESR Europe. “Our focus is on identifying markets with significant growth potential and we are committed to expanding our portfolio.”

Parisian logistics: Last-mile facility acquired by Valor Real Estate Partners in Wissous, near Orly Airport, in December 2023.
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