Owners of run-down warehouses on the edge of European cities could be
sitting on goldmines because online shopping will force firms to seek
distribution sites closer to customers who think speedy delivery is the
In an increasingly fierce market where the likes of Amazon and
Tesco pledge next-day or same-day delivery in specific time slots,
warehouse rents could rise 40 percent over the next decade, property
consultant CBRE said.
" Your industrial estate (near heavily
populated areas) is the high street of the future," said Jonathan
Holland, senior manager of Legal & General Property's industrial
fund, which has 770 million pounds under management.
"We are very much looking at owning warehouses around major conurbations."
43 percent of European Union citizens shop online, the European
Commission said in February, up from 26 percent six years ago. They were
expected to fuel a 12-15 percent growth in online sales across the
region over the next five years, Forrester Research predicted.
falling sales in austerity-hit Britain have forced retail property
values down 28 percent since end-2007, data from Investment Property
Databank showed. Values in euro zone countries fell 5 percent over the
same period, CBRE said.
The yield, or annual rent as a percentage
of the property value, on an industrial warehouse in a good location in
Europe was 7.8 percent at the end of September compared with 5.8 percent
for offices and 5.2 percent for shops, CBRE said.
yields depend more on lease length and the financial strength of the
tenant than location, compared with offices or shops, and would "edge
downwards" where demand from retailers was strong, CBRE said.
Retailers currently favour large sites in locations away from big population centres but with good transport links.
huge warehouses include sites in Dunfermline, Scotland and Rheinberg,
Germany while Marks & Spencer will open a warehouse the size of 11
soccer fields in Castle Donington, Leicestershire, next year.
That is changing, said Amaury Gariel, managing director of CBRE's European industrial logistics team.
such as Croydon, 16 kilometres south of central London, strewn with
empty office blocks and suffering high unemployment, and Créteil, a
scruffy suburb 19 km southeast of Paris, are examples of areas that
could be targeted as they are close to major highways and large local
workforces, Gariel said.
Warehouse rents at such sites could rise
20-40 percent over the next decade, he said, citing the greatest demand
in areas near the biggest European cities such as Amsterdam, London
and Paris for sites that have typically been used by mail delivery firms
and food distributors.
A tendency by governments to prioritise such areas for homes would squeeze supply and push prices higher, he said.
and property investors are at "a tipping point" in waking up to the
changing real estate map for distribution points in Europe, Holland
Amazon is on the hunt for about 20 sheds close to British
cities while Asda and Tesco are opening so-called 'dark stores' -
distribution centres which look like supermarkets on the inside but are
closed to customers - across Britain.
Prologis is buying a "significant" amount of such sites near large towns
and cities such as Milton Keynes in Britain and Hannover in Germany t o
meet future demand, European president Philip Dunne told Reuters.
Retailers face obsolescence unless they recognise how the type of property they rent needs to change, Gariel said.
are on the first page of the story regarding new ways to distribute
goods. What happens if retailers do not recognise it? Just look at what
happened to the fax and the telegram."
© Thomson Reuters 2012