CEE to challenge Western European logistics hubs - Prologis

Western countries remain the heartland of the European logistics landscape but markets in the east are beginning to challenge that dominance, according to new research by Prologis.

Ali Nassiri, head of research & strategy, Prologis Europe told PropertyEU: 'Western Europe remains the heartland of the Continent; that’s where most of the purchasing power is, the majority of stock, the best infrastructure, and where Europe’s gateways like Rotterdam, Antwerp-Brussels and Schiphol are located.’

‘However, Western Europe’s dominance will be increasingly challenged by some Central and Eastern European hubs which are gearing up and are becoming more interesting and favoured by customers. Look for instance at Turkey or Romania. Romania owes its top-10 position to its good scores on particularly real estate costs and availability of land, as well as the labour and governmental requirement.’

Nassiri was commenting on a new report 'Europe’s Most Desirable Logistics'. The report is based on a survey by Prologis’ research team, in partnership with Eyefortransport, conducted among 160 occupiers of logistics property from a variety of sectors.

The report contains link="rankings"]http://www.propertyeu.info/index-newsletter/benelux-tops-logistics-ranking/ which shows three Benelux markets, the Rhine-Ruhr region and Madrid were the most desirable logistics location in 2013. Asked about 2018, respondents put Pan-Regional Romania in fifth place with Madrid slipping to seventh place.

Nassiri said the amount of modern logistics stock in Europe is set to grow. 'About 15% of the overall stock in Europe is modern, while the percentage in the US is approximately 40%. This tells me that although Europe has a larger population than the US it has 4.5 times less Class-A space. Structural drivers like e-commerce and logistics outsourcing drive supply chain re-configuration and are more important than the ‘usual’ cyclical drivers such as GDP growth.

'In a low growth economic environment, the European sector has seen steady and strong demand for modern warehouse space as it is less sensitive to economic cycles. One of the key take-aways from the survey is that the consolidation trend moving away from multiple, smaller and obsolete facilities to larger, more efficient facilities will continue leading to more European and Regional as opposed to National and Local distribution networks. Efficient supply chains require larger facilities, which support both a pooling of inventories and a broader array of products.'

Nassiri added: 'One of the questions we asked the respondents is to rank 11 demand drivers based on the level of importance today and in 5 years time. Key takeaway here is again that they view the structural drivers like globalisation and outsourcing as more important than cyclical drivers like consumption and GDP growth.'

The full report is published on the Prologis website (link below).