Mainland Europe needs 3.5 million m2 of last-mile logistics space - research

Mainland Europe’s top seven e-commerce markets will need 3.5 million m2 of additional last-mile logistics space by 2026 due to rising online retail sales.

The data from Knight Frank’s latest European Logistics Report highlights that each €1 bn in online retail sales requires around 24,000 m2 of urban logistics space.

The online penetration rate in France, Germany, Italy, Spain, the Netherlands, Sweden and Poland is set to rise from an average of 15.6% in 2021 to 19.3% by 2026, while online sales will go up by 48%, from €293 bn to €434 bn.

The needs are the highest in Germany (1.37 million m2), followed by France (639,000 m2), Poland (536,000 m2), and Spain (378,000 m2).

Paris will lead demand for last-mile space among European cities, while three German cities, Berlin, Munich and Hamburg, are all in the top five demand hotspots.

Claire Williams, industrial & logistics research lead at Knight Frank, commented: ‘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, co-head of European capital markets at Knight Frank, 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 tenant demand and limited supply are driving up values and encouraging investors to expand their urban logistics platforms.’

Data from UK and mainland Europe e-commerce operators, compiled by Knight Frank, show that last-mile "spoke" facilities account for 20-25% of all warehouse space.

Although more areas are being designated for last-mile distribution hubs, there is less land for industrial use, particularly near major urban centres, resulting in record low urban industrial vacancy rates – just 3% in Barcelona for example.

Knight Frank anticipates that this will keep demand outpacing supply and support rental growth throughout mainland Europe.


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