The development of mega distribution sheds has clearly accelerated across parts of Europe, with one White Paper suggesting the Netherlands has seen a doubling of XXLs.
If you have ever driven into New York City from neighbouring New Jersey, chances are you took note of the swathes of industrial land comprising Port Newark, Port Elizabeth and Port Jersey Newark on the banks of the River Hudson.
The equivalent in London, you could say, is Dartford in Kent where along the banks of the River Thames construction recently began on a £200 mln (€220 mln) distribution centre dubbed ‘Europe’s largest warehouse’.
The ‘Powerhouse’ mega distribution centre is located next to the Dartford Crossing and is being developed for a global online retailer, reported to be Amazon.
Some 2.3 million sq ft (around 215,000 m2) of logistics space is being created at the former Littlebrook power station by developer Tritax Big Box with Bericote Properties. Dartford Council, the local authority, initially gave planning consent for a 450,240 sq ft facility in 2018 and reportedly followed up with consent for a further 1.7 million sq ft in June of this year.
If indeed the XXL shed is for Amazon, it would apparently make it the retailer’s largest fulfilment centre in Europe. It is an exciting development, but also in line with the trend of the past five years, as René Buck, founder of real estate consulting firm, Buck Consulting International (BCI), attests: ‘Effectiveness and efficiency are gained by supersizing warehouses.’
In a White Paper published in October called ‘Mega DCs’, Nijmegen-based BCI worked with Hamburg-based Bulwiengesa for the first time to produce data on just how much new XXL space has been created in the heart of Europe – Germany, the Netherlands, and Belgium. The data makes it clear there has been a pronounced increase in activity.
The two firms discovered that over the period from 2013 to 2019, a total of 424 mega-distribution centres totalling 28.9 million m2 have been worked up, including facilities for which work started in 2018-19 but which are due to open in 2020-21.
This is a clear acceleration according to the researchers, who calculate that the number of XXL warehouses in Germany, the Netherlands, and Belgium is up 57% compared to 2015-2017. The majority of the 424 centres have been developed in Germany (285, 67%), followed by the Netherlands (98, 23%) and Belgium (41, 10%).
The advisers say that demand for logistics warehousing has been growing in the past few years due to a number of factors. These include the booming pre-Covid-19 European economies, which have generated more consumer and business demand; the rapid growth of e-commerce leading to more demand for specific e-commerce warehousing with packing and return facilities for example; growing global trade, which has led to an increase in European distribution solutions at US and Asian multinationals; and low interest rates which makes financial investments in warehousing attractive.
Has the onset of Covid-19 changed this? BCI and Bulwiengesa say that demand for logistics services is increasing, driven by technological and social change. ‘This confronts the actors with the task of aligning their location networks to this additional demand.’
The reports adds: ‘The decision criteria are in conflict between specific location preferences and restricting factors such as the availability of land for development or employees.’
It concludes: ‘In practice, obstacles have been encountered in many places to realign locations close to consumers. A high level of competition for building land – especially in the major cities – means that compromises have to be made in the choice of location in many places. The search for a stable location for the future is therefore a complex undertaking for which there is no single solution.’
