The top seven e-commerce markets in mainland Europe will require an additional 3.5m sq m (37.7m sq ft) of last-mile logistics space before 2026, according to figures from Knight Frank.
The prediction comes as online retail sales are expected to increase by 48% over the next five years.
According to Knight Frank’s European Logistics Report 2022, each €1bn in online retail sales requires around 24,000 sq m of urban logistics space. In France, Germany, Italy, Spain, the Netherlands, Sweden and Poland, online retail sales totalled €293bn in 2021, with an online penetration rate of 15.6%. Penetration rates are expected to increase across these markets over the next five years, averaging 19.3% by 2026. This is expected to drive online retail sales to €434bn – a €142bn increase from current levels – and fuel demand for urban distribution hubs, which facilitate home delivery.
The requirement for additional last-mile space is largest in Germany, where an estimated 1.37m sq m will be needed by 2026. France could require approximately 639,000 sq m, Poland an additional 536,000 sq m, and Spain 378,000 sq m.
Knight Frank also found that between 20% and 25% of total warehouse space was currently allocated to last-mile “spoke” facilities.
Claire Williams, industrial and logistics research lead at Knight Frank, said: “As Europe’s urban population continues to swell, consumption in these centres will rise concurrently. Paired with growing online retail penetration and a continued focus on convenience and speed of delivery, the result will be increased demand for urban logistics space across the continent.
“Competition between use classes is constraining logistics development, particularly in those locations with the highest population densities. Though the adoption of new and emerging technologies is enabling more efficient use of space and potentially lessening the total amount of space needed, the shortfall of available urban distribution space is likely to persist for the foreseeable future, supporting rent levels in urban markets across Europe.”
Richard Laird, Knight Frank’s co-head of European capital markets, added: “Several markets across Europe are well-positioned to benefit from high-growth economies and expanding retail sales. While Covid has accelerated growth in online retail and home delivery, some European markets remain some way behind more mature e-commerce markets such as the UK, therefore offering the potential for further expansion. Robust tenant demand and limited supply are driving up values and encouraging investors to expand their urban logistics platforms.”
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