Amazon reshapes European logistics landscape

US ecommerce giant Amazon has been a driving force in the development of new XXL logistics facilities in Europe, according to PropertyEU’s ranking of the leading logistics developers in Europe.

In recent years Amazon has accounted for more than 1.6 million m2 of logistics space, according to our data. In Europe, Sydney-listed Goodman has developed the most logistics space for Amazon, or roughly 1 million m2.

Other players are also driving developments for the ecommerce giant. US developer Panattoni is currently building a 130,000 m2 facility for Amazon in Prague which is due to be completed this year after rounding off a mammoth 246,000 m2 project in 2014. Prologis has also developed several built-to-suit sheds for Amazon totalling some 140,000 m2 across Europe as well as facilities in Cologne, Prague-Jirny and Tilburg for other ecommerce players.

Altogether, however, Goodman has benefitted the most from this new force in Europe. For the fourth year running, the Australian group has emerged as the largest logistics developer in Europe based on the volume of completed projects between 2012 and 2014.

Goodman, alongside Panattoni and Prologis, also tops our overall ranking this year which includes retail and office developers. It is the first time since the ranking was launched that the top 3 spots are taken by logistics developers.

Goodman in particular has in recent years helped Amazon pioneer a new mega size of shed, Philippe van der Beken, the company’s managing director for continental Europe, told PropertyEU in an interview. While 40,000 m2 has traditionally been a large size for a distribution facility, Amazon was seeking a facility of 123,000 m2 when it first entered Europe, he said. Initially the large size of Amazon’s new distribution facilities sparked incredulity and scepticism, but the function of such buildings is becoming more recognised and accepted, he noted.

‘Amazon was a pioneer and the size of its first facility made it a big risk. Now the average size of many retail and e-commerce buildings is increasing.’

Polarisation between big and small sheds
Amazon’s very large sheds of 100,000 m2 or more may be twice as big as the norm, but facilities of between 20,000 and 50,000 m2 have in recent years become more common, noted Andy Gulliford, chief operating officer of UK REIT Segro. ‘That’s the way it’s going. Large XXL sheds and mega campuses have become the order of the day.’

According to Van der Beken, many customers nowadays including ecommerce as well as other players are seeking different formats such as cross-dock facilities, fulfilment centres and hub and spoke buildings. ‘These demands reflect complex supply chain needs, designed to make delivery more efficient.’

In due course, however, greater standardisation will come, he predicted. ‘The more we see of these types of buildings, the more standardisation there will be across the different product categories. The different functions will become more clearly commonly defined.’