Some 11 per cent 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 research by property consultant Savills.
The UK with 21.4 per cent of all retail sales attributed to e-commerce and Germany with 15.1 per cent are already beyond this point and facing challenges in servicing e-commerce demand
France, the Netherlands and Sweden are the next countries set to pass 11 per cent tipping point. 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.
“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 per cent between 2015-2018 to 25.6 million sq ft, reflecting a vacancy rate of 7.8 per cent, down from 11.3 per cent in 2013, while the vacancy rate for modern prime logistics space in Sweden is currently below 3 per cent.
In Impacts, its global research programme, Savills highlights the disruption retailers face in servicing e-commerce demand, both in finding appropriate warehouse space 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 e-commerce market in Europe, Savills highlights that London has seen vacancy rates on warehouse space within the city centre drop to just 2.5 per cent 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 per cent 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.
These include multi-level buildings, micro hubs, drones, electric vehicle delivery, the use of canal systems and rivers as a means to deliver good to the centre of built up areas etc. beds and sheds whereby residential and indeed other building uses are combined with logistics in built up areas which otherwise would not support a separate logistics use.
