E-commerce boom continues to drive record levels of investment & leasing activity across Europe’s logistics market

According to Savills, the e-commerce boom is continuing to drive demand for industrial and logistics assets across Europe, as new records were set for both levels of investment and leasing activity in 2021.

Some €62bn was invested into industrial real estate across Europe, marking a 79% increase on the previous five year average. The UK (€19.5bn) outperformed the rest of the continent and accounted for 31% of total investment activity.  Germany (€8.6bn), France (€6.5bn) and Sweden (€5.8bn) and the Netherlands (€5.7bn) also recorded strong levels.

Savills research also noted that investment into industrial assets accounted for 66% of European omnichannel investment in 2021, up from 47% in 2019, as investors were willing to pay premiums to gain exposure to the sector.

Marcus de Minckwitz, Head of Industrial & Logistics, Savills EMEA, suggests, “Market fundamentals have been hugely favourable for the sector in recent years, and they will continue to underpin another strong performance for the year ahead. Our European Logistics Census last year indicated that 46% of occupiers anticipate that they will increase their warehouse floor space over the next 12 months, among the highest in the online retail sector. With such constrained supply, we expect to see increased development in the sector, despite rising construction costs, as well as appetite for assets in non-core locations as investors move up the risk curve in search of higher returns.”

Chris LaRue, head of industrial agency, Savills CZ&SK, adds: “The logistics & industrial sector continues to be in high demand among occupiers and investors alike. The sector is undergoing a major transformation as the lines continue to be blurred between what can be considered retail and what can be considered industrial. When combined with companies moving from “Just in Time” to “Just In Case”, demand has skyrocketed.  With demand significantly exceeding supply, the sector will need to continue transform to allow for a more balanced match between supply and demand.”