issue #4 research to go xl logistics europe globalisation and e-commerce the logistics industry expands in line with economic growth for many years, the transportation industry has benefited from the increasing interdependence of the world‘s economies and rising flows of goods. although cross-border trade in europe has grown significantly in recent years, the logistics industry is only expanding at the same rate as the economy as a whole, indicating the weak- ening impact of globalisation. growth of the european economy, foreign trade and transport economy index (2000 = 100) 220 200 180 160 140 120 100 2000 gdp real 2005 2010 2015 2020* foreign trade transportation & storage source: oxford economics * forecast e-commerce as a strong growth factor the rapid growth of e-commerce is driving the demand for logis- tics services. in the united kingdom, e-commerce has achieved a market share of almost 20% of total retail sales - turnovers are particularly strong in the pre-christmas period. online share of uk retail sales (%) 20 15 10 5 0 12/06 12/07 12/08 12/09 12/10 12/11 12/12 12/13 12/14 12/15 12/16 12/17 source: ons rapid rise in parcel volumes the parcel business, which results from e-commerce, leads to a high demand for sophisticated solutions in order to guarantee fast and efficient delivery, especially in the metropolises. the importance of city logistics will become even more crucial in the coming years as parcel volumes continue to grow. projected e-commerce parcel volumes for selected cities (million) london berlin madrid paris hamburg munich barcelona lyon milan warsaw dusseldorf amsterdam brussels prague 0 2016 100 2021 200 300 500 source: cushman & wakefield 400 conventional logistics businesses dominate the industry although the parcel services segment is growing strongly, tradi- tional business areas make up the bulk of the logistics sector. con- tract logistics clearly dominates the industry in europe and reach- es a market share of around 40%. contract or third-party logistics providers (3pl) not only supply transport and storage services but also additional services such as assembly and commissioning for the customer on the basis of longer-term contracts. market shares and volumes by types of logistics services in europe 106 86 11% 86 9% 9% 8% 77 8% 77 7% 70 41% 394 contract logistics warehousing & terminal ocean cargo general truckload (ftl) bulk logistics specialized transportation courier, express and parcel (cep) groupage / ltl air freight (2%) 19 (5%) 45 volume (€ bn), share (%) source: fraunhofer scs (data for 2014)
logistics europe europe as a powerful logistics area europe as a competitive global logistics location the logistics performance index published by the world bank assesses countries according to six dimensions of trade and logis- tics, including the quality of infrastructure and the timeliness of shipments. the top 10 markets in the 2018 ranking include 8 eu countries, led by germany, sweden and belgium, which are ahead of japan or singapore. germany dominates the european logistics industry germany is by far the largest logistics market in europe, driven by its economic strength, its central location and function as a trans- port hub on the continent. similar to poland or the czech republic, logistics is of above-average relevance for the german economy as a whole. world bank logistics performance index 2018 turnover in the logistics industry in 2016 germany sweden belgium austria japan netherlands singapore denmark united kingdom finland u.a.e. hong kong, china switzerland usa new zealand france spain australia italy canada 4.20 4.05 4.04 4.03 4.03 4.02 4.00 3.99 3.99 3.97 3.96 3.92 3.90 3.89 3.88 3.84 3.83 3.75 3.74 3.73 € bn 300 250 200 150 100 50 0 k u e c n a r f y l a t i i n a p s y n a m r e g s d n a l r e h t e n d n a o p l d n a l r e z t i w s n e d e w s logistics turnover proportion of gdp % 12 10 8 6 4 2 0 d n a e r i l a i r t s u a y a w r o n e c e e r g k r a m n e d . p e r h c e z c d n a n f l i i m u g e b l source: world bank (top 20 in descending order) source: oxford economics, fraunhofer scs (spain: 2014 figure) europe‘s logistics companies as global leaders the strength and competitiveness of the european logistics indus- try underlines the strong global position of european companies. led by deutsche post dhl and kuehne + nagel, five european companies are among the global top 10 third party logistics pro- viders in terms of revenue. world‘s largest 3pl companies by gross revenue (usd bn) expansion of transport infrastructure in europe‘s periphery for the european commission, an efficient road infrastructure is fundamental to enhancing the european market and reducing regional disparities. by joining the eu, the motorway network in the countries of south and eastern europe was heavily enlarged since 1990. length of motorways (1,000 km) 6.3 5.9 h i t a c h t r a n s p o r t 27.6 i deutsche post dhl 6.9 6.8 d a c h g e o d i s j . b . h u n t s e r expeditors ceva logistics 6.9 7.0 8.0 ups xpo logistics 9.5 sinotrans 9.5 dsv 11.4 c.h. robinson nippon express 14.9 16.7 kuehne + nagel 22.6 db schenker 18.6 spain germany france italy uk portugal netherlands sweden hungary belgium austria greece poland switzerland denmark ireland finland czech rep. slovakia norway luxembourg 0 2 4 6 8 10 12 14 16 source: armstrong & associates (data for 2017) 1990 2015 source: eurostat
need for modern rental space logistics europe the economy and optimization of space are driving demand take-up of logistics space has risen in recent years due to the eco- nomic upturn and the boom in e-commerce. however, a consider- able proportion can be attributed to relocations in the course of modernisation and rationalisation. nevertheless, today’s demand for modern space is significantly higher than in the last upswing 10 years ago. logistics take-up in european key markets (m sq m) increasing demand stimulates construction activity completions have increased in recent years, in terms of volumes especially in the core markets of germany and the uk. central europe is catching up but at the same time the region features a significantly higher share of speculative construction activity. logistics completions by region (m sq m) 12 10 8 6 4 2 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 portugal ireland belgium hungary italy netherlands czech republic poland spain germany uk france ø 10y all countries 3 2 1 0 benelux cee fra nce g er m a ny italy, iberia scandinavia uk 2012 2013 2014 2015 2015 2016 2017 source: pma (estimates based on brokers‘ data) source: pma (estimates including units of >10,000 sq m only) strong demand for logistics space outside of the top 7 demand for logistics space is much more regional than in other real estate sectors. the example of germany demonstrates that, in addition to the major metropolises, regions with high traffic connectivity, local economic power or a gateway role generate considerable demand and take-up. logistics take-up in german regions (aggregate 2013-2017, m sq m) rents in the logistics sector in an upwards trend the historical trend shows that rents for logistics space in most european countries and regions are moving sideways, partly interrupted by economic cycles. nevertheless, rents in logistics hotspots have risen in recent years. this trend is likely to con- tinue thanks to the scarcity of land and high construction costs. however, the potential for rental growth in the entire market appears to be limited. prime logistics rents (country averages in €/sq m/year) 120 ruhr area frankfurt hamburg rhine-neckar berlin hanover - brunswick dusseldorf osnabrück - münster stuttgart - heilbronn mönchengladbach leipzig - halle cologne bremen munich erfurt nuremberg kassel - bad hersfeld 100 80 60 40 20 0 0 0 . c e d 2 0 . n u j 3 0 . c e d 5 0 . n u j 6 0 . c e d 0 0.3 0.6 0.9 1.2 1.5 1.8 2.1 2.4 2.7 france germany source: jll 8 0 . 9 0 j n u . c e d netherlands 1 1 . n u j 2 1 . c e d 4 1 . n u j 5 1 . c e d 7 1 . n u j spain united kingdom source: cushman & wakefield
logistics europe investors pay strong attention to logistics high liquidity in the uk and germany from a regional perspective, the uk dominates the investment market, followed by germany, which has gained in importance particularly in 2017. in addition, liquid investment markets have been established in france, sweden and the netherlands. major economies such as spain and italy have received little attention from investors due to their economic weakness, even though volumes have increased in the recent past. the locations of the transactions analysed largely reflect the “blue banana“ as the core area of european logistics from south england to northern italy. logistics transactions in europe 2015 – h1 2018 logistics is a primary focus of investors the logistics sector has gradually gained in importance among institutional investors over the past two decades, as the total transaction volumes as well as the market share in commercial real estate investments demonstrate. the volumes in recent years are well above the levels of the boom years 2006/07. logistics transaction volume in europe € bn 40 30 20 10 0 % 15 10 5 0 0 0 0 2 1 0 0 2 2 0 0 2 3 0 0 2 4 0 0 2 5 0 0 2 6 0 0 2 7 0 0 2 8 0 0 2 9 0 0 2 0 1 0 2 1 1 0 2 2 1 0 2 3 1 0 2 4 1 0 2 5 1 0 2 6 1 0 2 7 1 0 2 transaction volume market share in commercial property source: pma strong performance in northern and central europe according to msci, investments in logistics and industrial property have clearly outperformed the overall market in europe over the past 10 years. among the top performers, countries in northern and central europe dominate. historically total returns in the sector were driven by income, however recent out-performance was due to yield compression. risk-return-profile of logistics investments by country . ) . a p % a t o t ( 7 1 0 2 - 8 0 0 2 n r u t e r l 9 8 7 6 5 4 3 2 1 0 norway sweden germany poland france netherlands belgium switzerland austria finland italy denmark portugal uk czech republic spain hungary 0 2 4 6 8 10 12 14 volatility 2008-2017 ireland 16 18 source: msci logistics investment “blue banana“ source: pma (excluding portfolio transactions, deals not comprehensive) your contact are you interested in our range of services and the research published by our company? if so, contact us at: corpus sireo real estate gmbh aachener straße 186 50931 cologne firstname.lastname@example.org www.corpussireo.com disclaimer: all rights to this issue reserved. reprinting, including excerpts, subject to prior written permission. photographs, charts, and layout designed by the editorial team are pro- tected by the applicable copyright laws. the data and information contained in this publication are based on publicly available sources that the editor deems to be trustworthy. the corpus sireo group of companies assumes no warranty regarding the accuracy or completeness of the information provided. any opinion offered represents the current assessment of the editor. no warranty is assumed regarding the opinions and forecasts ventured. in particular, no liabil- ity is assumed for future developments in the real estate economy. the information contained in this publication is subject to change without notice both during the time of its publication and thereafter.