London remains the world's most expensive market for prime warehousing property occupier costs, reaching $44 (€40) per square foot, representing a 7.1% increase from June 2023 to June 2024.
According to Savills, global prime warehousing costs rose by 1.7% in the first half of 2024, a slowdown from previous periods.
Kevin Mofid, Savills head of EMEA Logistics Research, commented: ‘Whilst a gentle increase in vacancy rates has taken some of the pressure out of the warehousing market, London is a region with constrained land supply, many competing uses and a broad church of occupiers in competition for the best space. A large population and increasing online retail penetration rates continue to drive demand for good quality space.’
Savills reports that annual prime warehouse costs increased by 5.2% globally between 2023 and 2024. This marks a significant decline from the 9.0% growth seen in the previous year, largely due to increased supply and moderated occupier demand following the post-pandemic boom.
While 74% of markets experienced cost growth, primarily in Europe and Asia, the average masks regional variations.
Paul Tostevin, head of Savills World Research, added: ‘Warehousing has recently benefitted from a booming logistics industry and the global diversification of manufacturing, fuelling significant rises in property-associated costs, but we’re now seeing growth slow as higher supply and more moderate demand is helping to rebalance many markets.’
In a separate report, Savills highlighted that Poland has only 5.8 years' worth of available industrial and logistics development land, 20% less than the UK.
Investors often compare Poland's logistics market to Western European countries, assuming an excessive land supply, suggesting uncontrolled development and potential oversupply, leading to rising vacancy rates and slower rental growth.
However, Savills research shows that the UK has a land supply capable of accommodating 20.6 million m2 of warehouse space, while Poland has only 16 million m2. This indicates that considering its market size, Poland does not have an excessive land supply compared to other mature markets.
Kevin Mofid commented: ‘This common misconception has historically painted Poland in a negative light when it comes to industrial & logistics investment strategies. However, the country actually strikes the perfect balance between speed to market from a build-to-suit perspective and underlying location fundamentals. What’s more, Poland’s attractive policy incentives, lower labour costs and business-friendly environment make it an ideal destination for multinational corporations looking to nearshore operations and improve supply chain resilience.’
Savills notes that Poland is now the fourth largest logistics market on the continent, with only Germany, the Netherlands, and the UK transacting more warehouse space since 2012.
Poland is already a key distribution and fulfillment location for global e-commerce platforms, including Amazon, Zalando, and Shein. However, Savills notes that the country is poised for significant e-commerce expansion, with retail penetration forecast to grow from 13.1% to 16.6% by 2029, in line with strong domestic growth forecasts.
