Even after record year 2017, the logistics property market remains busy. In the first half of this year, 1.4 million square metres of logistics property were put into use, up 6 per cent from a year earlier.
So figures international real estate consultant Cushman & Wakefield. If the market continues to develop at this level, take-up for the whole of 2018 will exceed last year's record level.
Penchant for urban areas
Logistics users experience scarcity of suitable existing supply. At 7.6 million square metres, the business space supply seems sufficient to meet demand, but much supply is severely outdated and is also in the wrong location.
Logistics parties are increasingly seeking proximity to cities in order to get sufficient qualified personnel. "In this, they do face increasing competition from parties buying strategic land positions. Incidentally, this penchant for urban areas does depend heavily on the central point of gravity and the area within which an organisation's supply chain operates. Whereas an e-commerce company wants to be as close to its customers as possible, a national or regional DC is more likely to opt for proximity to production facilities," says Menno van Boxtel, Head of Logistics Cushman & Wakefield.
Users divert to new construction
Users are therefore often forced to move to new buildings. This creates challenges, as land positions within (and now also outside) hotspot regions are increasingly scarce. Developers and investors also have to deal with rising construction costs, which are rising faster than rents.
Yet these factors are not inhibiting the need for logistics real estate. Cushman & Wakefield predicts that at current market trends, take-up for the whole of 2018 will exceed the record level of 2017.
