Demand for ecommerce warehouse space in three European countries is about to skyrocket as they reach a tipping point in maturity, says a report by Savills.
The property firm claimed that 11% of sales taking place online is the tipping point at which warehouse take-up has to increase in order to be able to manage sales.
France, the Netherlands and Sweden are set to hit this point soon, with their ecommerce sales at 10%, 9.5% and 9.5% respectively.
The forecast is based on analysis of the UK and Germany, where 21.4% and 15.1% of sales take place online respectively. In the UK, London has seen vacancy rates on warehouse space in the city centre fall to 2.5% with top rents hitting £30 per square foot.
Savills said the other three growth markets had already begun to see movement, with a fall in vacancy rates. In the Netherlands, supply had decreased 19% between 2015 and 2018 to 25.6 million square foot, meaning the vacancy rate fell from 11.3% in 2013 to 7.8% in 2018. Sweden now has a vacancy rate for prime logistics space below 3%.
Kevin Mofid, head of industrial research at Savills, said: “11% is the magic number where ecommerce 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.”
Mofid said that developments such as the Paris AIR2 Logistique at France’s largest river port would allow distribution via water and rail and reduce traffic congestion.
He said the other countries should look to address demand issues upfront before they hit the 11% tipping point rather than in hindsight.