A huge increase in urban logistics property space is required across key centres across Europe in the next few years to meet the exponential growth of eCommerce and the resultant need for last mile delivery in cities, according to a new research report from Cushman & Wakefield.
The Urban Logistics report uses Cushman & Wakefield’s ‘Urban Space Model’ – developed in partnership with P3 Logistic Parks – to quantify total urban logistics space requirements in Europe’s top eCommerce markets based on current and future online sales volumes.
This new property sub-sector, from which the report takes its name, has emerged to meet the rapid growth in parcel deliveries. The ‘Urban Space Model’ expects delivery volumes across Europe to increase by a further 69% by 2021, with variations by market impacting space required. Its methodology includes a number of inputs and assumptions based on actual urban logistics practices and current online transactional data.
In terms of population and buying power, the major towns and cities in the Midlands will see the greatest rises in demand, rising by as much as 42%.
The region will continue to benefit from strong online sales growth which will fuel increasing levels of demand for space by 2021.
The report also shows that the cost of urban deliveries is high, up to 50% of total supply chain costs and is expected to grow at 7-10% over the next five years. Currently, real estate solutions are situated on the outskirts and unable to enter cities due to competing higher-value land uses and in some areas stakeholders’ opposition to logistics.
David Binks, Head of UK Logistics & Industrial agency at Cushman & Wakefield said: “Urban logistics is set to be one of the most significant growth markets of the next few years as eCommerce continues to grow across the Midlands. Every additional mile adds to the cost and speed of delivery. There is no doubt that demand is there, however, securing the necessary consents to develop suitable facilities in city centres is bringing its own significant challenges.”
“The Urban Space Model provides invaluable insight for occupiers and developer investors in anticipating the demand in the most dynamic part of the sector.”
Lisa Graham, Head of EMEA Logistics Research & Insight, Cushman & Wakefield said: “As more of us do our shopping online, it’s vital that our large cities have the capability to handle the increase in parcel capacity across across the region. Our Urban Space Model shows that substantial growth is expected across the board. The fact that a 42% rise in the UK speaks volumes for the direction the market is heading.
“Looking ahead, it will be crucial for online retailers and parcel companies to use urban logistics space in order to meet rising customers’ expectations in terms of speed and reliability of delivery, while at the same time reducing costs in order to justify higher rents.”
