Take-up in Europe's logistics markets is set to shrink this year by between 32% and 46%, according to new research from independent real estate consulting firm Buck Consultants International (BCI).
Despite positive dynamics in the sector, including the growth of urban last-mile assets and the robust e-commerce trend, the research concludes that the European logistics markets will suffer on balance from the impacts of Covid-19.
The data shows that across nine important logistics real estate markets, the take-up in 2020 will fall 32% compared with 2019 if business returns to 'normal' as of 1 October. If business circumstances are back to normal only as of 1 January, 2021, the total new take-up will decrease by 46% compared with last year. The markets studied include Germany, France, UK, Poland, the Netherlands, Belgium, Italy, Spain and the Czech Republic.
But the news isn't all bad for logistics investors and the sector in general, which will continue to see interest from Asian and US investors, while the establishment of new mega distribution centres - exceeding 40,000 m2 of space - is set to continue albeit at a slightly lower pace, with the Netherlands, Germany and Poland favoured markets. Yields for prime warehouses are set to increase only slightly by an average of 15 basis points.
'Our study shows that logistics real estate is a robust asset class and relatively Covid-19 proof. It is obvious that there are differences between the nine countries and submarkets in these countries,' said René Buck, CEO of BCI.
'The accelerated growth of e-commerce, higher inventory levels in order to create more risk-resilient supply chains and potentially reshoring of assembling activities will drive the demand for logistics real estate,' Buck added.
The nine markets studied recorded a take-up of 23.5 million m2 in 2019. At the beginning of the year the respondents expected about the same take-up volume in 2020 as 2019 but at best, the new figure is unlikely to exceed 15.9 million m2 (32%).
The research concludes that the logistics heart of Europe (Germany, Netherlands, Belgium) is expected to do better than other markets, while Spain, Italy and the Czech Republic will probably suffer the most. Prime rents across 22 logistics regions in Europe are expected to be relatively stable this year, with no upward potential.
