Savills News

Savills: France, Netherlands and Sweden next European markets set to hit e-commerce 'tipping point'

• 11% of all retail sales attributed to e-commerce sales is the tipping point at which retail is transformed and a boom in warehouse take-up is triggered, according to Savills • UK (21.4%) and Germany (15.1%) already beyond this point and facing challenges in servicing ecommerce demand • France, the Netherlands and Sweden next countries set to pass 11% tipping point

Multiple European countries are set to see a surge in demand for warehousing and logistics space as they surpass the 11% ecommerce tipping point that will transform their retail sectors into true multi-channel markets, says Savills, and bring with it challenges in how to meet demand.

France (ecommerce currently 10% of all total retail sales), the Netherlands (9.5%) and Sweden (9.5%) are the next countries due to hit this trigger point, says Savills, following Germany (15.1%) and the UK (21.4%). Savills says that if these countries follow the pattern set by the UK that this is likely to trigger a surge in demand for warehouses.

According to Savills, these markets have already seen large increases in the volumes of warehouse space taken in the past 12 months and corresponding falls in vacancy rates. In the Netherlands, Savills says supply decreased by 19% between 2015-2018 to 25.6 million sq ft, reflecting a vacancy rate of 7.8%, down from 11.3% in 2013, while the vacancy rate for modern prime logistics space in Sweden is currently below 3%.

In Impacts, its global research programme, Savills highlights the disruption retailers face in servicing ecommerce demand, both in finding appropriate warehouse space in order to meet consumers’ expectations of receiving fast deliveries and tackling major issues around congestion and pollution in Europe’s urban centres. As the biggest city in the most advanced ecommerce market in Europe, Savills highlights that London has seen vacancy rates on warehouse space within the city centre drop to just 2.5% and top rents surge to £30 per sq ft as retailers compete for very limited space – a trend that is now echoed in Germany and is likely to follow shortly in France, the Netherlands and Sweden.

Kevin Mofid, head of industrial research at Savills, comments: “11% is the magic number where e-commerce sales go from something retailers can largely manage as part of their traditional retail operations to a force that transforms the entire business. Competition for warehouse space will surge across European centres as markets hit this point but, as we’re seeing in London, lack of supply, high rents, pollution and congestion are all problems that must be addressed by technology and innovation.

“Luckily, there are already examples of this. The ‘Paris AIR2 Logistique’ at Port de Gennevilliers, France’s largest river port, should help meet the nation’s growing taste for ecommerce; this two-storeyed warehouse is environmentally friendly and allows distribution of goods via the River Seine and rail to minimise traffic movements. If others adopt similar solutions and look to address the issues upfront before they hit the 11% tipping point, it will be much easier than trying to solve them in hindsight, as London has found.”  

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