The logistics market is far from mature, a conclusion that applies both to the investment market and the user market.
"The expected growth of the e-commerce sector means that more development and take-up will occur in locations where consumers can be reached quickly and efficiently."
Partly due to Brexit, interest in logistics real estate, particularly in existing hotspots focused on international distribution (e.g. Rotterdam and Rosendaal), will only increase. Scarcity will improve the rentability of more outdated logistics properties, making rent increases for this type of real estate more likely.
Within hotspots, there will also be a greater focus on developing brownfield sites and redeveloping existing properties to ensure more efficient use of the limited space available. Alongside infill development through more efficient building, multi-storey development will also be a trend for the future. The largest multi-storey warehouse in the Netherlands is already under development: known as the XXL Logistic Cityhub, this last mile warehouse spanning 220,000 sq m is currently taking shape in the Port of Amsterdam.
Investor interest in Dutch logistics property from the Netherlands and abroad looks set to continue for the time being. The relatively low risk associated with logistics real estate compared to other categories will lead to the establishment of more funds with logistics real estate as their focus. Scarcity of space will increase the number of investments being made outside the hotspots. The resulting drop in initial yields for logistics property outside the hotspots will narrow the gap with yields inside the hotspots.
The stock will therefore continue to grow for the time being, while vacancy rates remain low. Rents will continue to rise and, particularly in secondary areas, initial yields will continue to fall.
Logistics Real Estate Stock
The logistics real estate stock grew by 3 million sq m in 2020, while the vacancy rate fell from 6.1% to 5.6%. This indicates continuing interest in logistics real estate in the Netherlands.
Rising Take-Up Volume
In 2020, over 2.6 million sq m of logistics real estate was taken up. This ongoing demand is causing rents in many regions to rise.
Stable Investment Volume
Total investment volume also remained stable compared to 2019, at nearly €3.2 billion. Continuing investor interest is reflected in the compression of initial yields in every hotspot, as well as in areas beyond.
Scarcity Within Hotspots
Scarcity within hotspots is leading to a further spread in investment volume, beyond hotspots and out across the Netherlands. In addition, investors are increasingly investing in portfolios that consist of smaller last mile logistics properties.
In an effort to counter the negative impact of Brexit, companies from the UK are seeking to establish a base in the Netherlands. This demand is most likely to be determined by three factors: presence of export facilities, quality and vacancy of stock, and availability of labour.
The areas with the Netherlands’ two largest ports top the ranking for UK interest: Rotterdam and Amsterdam. This is mainly due to their outstanding connections with international distribution networks and to the local availability of labour.
Sources Savills Research, Statistics Netherlands (CBS), ING, Brainbay, BAK, Vastgoedmarkt.nl.
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Douglas van Oers
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