Lack of logistics space pushes last mile occupiers to larger city hubs

Now that consumers are becoming increasingly used to receiving packages in their homes even faster, this is having an obvious consequence for logistics property. After all, the last phase of the supply chain needs to be located increasingly closer to the end user. The requirement to receive orders quickly means that suppliers must be located as close to as many recipients as possible. As a result, last mile logistics will increasingly need to be incorporated in our urban regions. However, the closer to as many consumers as possible they are located, the scarcer the land.

Last mile logistics will need to be incorporated in our urban regions

New centres focussed on city logistics will therefore need to be built on brownfields or greenfields close to the cities. But for both greenfields and brownfields, there is strong competition between city logistics on the one hand, and housing construction on the other hand. Because the demand for both uses is vast in the contours of the city, an actual ‘war on land’ is unavoidable. Municipalities will therefore need to formulate a clear action plan to meet the demand for both types of use. Larger logistics developments on existing business parks close to the major cities, such as the Amsterdam Logistics CityHub, will therefore increasingly become the norm. Now that the competition for logistics investments in general is increasing, these types of developments are offering new investment opportunities. Thanks to the user demand from businesses focussed on transport to the city, the risks are actually very limited, and the ingredients are often present to facilitate the further growth of the market. The main condition, however, is that space for this is found on the land that is becoming increasingly scarcer in and around the Dutch cities.

Key Findings

This year, the logistics market has turned out to have extremely strong foundations. Export recovered by +32.6% in the second quarter of 2021 compared to the same quarter the year before, and sales of online retail increased explosively in 2021.

As a result, the total take-up volume in the first half of 2021, was 40% higher than in the first half of 2020. Among e-commerce businesses, the take-up rose by 33%.

At national level, logistics stock has also increased considerably over the past few years. However, this rose more steeply in hotspots outside the major cities, due to limited space in existing hotspots.

The amount of land to be allocated dropped by 18% between 2016 and 2020. Consequently, very limited land is available for last mile developments in particular, partly also due to the strong competition from other uses such as housing.

Due to the location of major business parks and ports close to the city such as Westpoort in Amsterdam, the cities of Amsterdam and Rotterdam still have space available for last mile occupiers. In the contours of The Hague and Utrecht, however, that is much less the case, as the availability on existing business parks is very limited.

Overall, there is a true ‘war on land’ going on.

Due to the scarcity of land and the continued growth of the sector, interest in logistics property from investors keeps rising. For example, it seems that logistics will become the largest investment category in H1 in terms of investment volume.

Sources Savills Research, Statistics Netherlands, Sendcloud, Thuiswinkel.org, IBIS

Savills World Research We provide bespoke services for landowners, developers, occupiers and investors across the lifecycle of residential, commercial or mixed-use projects. We add value by providing our clients with research-backed advice and consultancy through our market-leading global research team

Douglas van Oers

Co-head Logistics

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Niek Poppelaars

Co-head Logistics

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Amy Bulthuis

Senior Valuer

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Jordy Kleemans

Head of Research & Consultancy

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Raymond Frederiks

Consultant Research & Consultancy

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