An additional 30m sq m of industrial and logistics space could be required across Europe over the next five years thanks to rising household numbers and changing consumer behaviours, according to new research from Knight Frank.
Over the past decade, the amount of occupied industrial and logistics floorspace per UK household has grown from 9.5 sq m to 10.1 sq m, driven by rising incomes, increased online retail spending and urbanisation, and as European cities continue to expand, this increase is expected to accelerate, with last-mile facilities in urban areas becoming an increasingly critical part of distribution networks.
Ecommerce continues to reshape Europe’s logistics sector and Knight Frank’s forecasts the growth in online sales across Europe’s top five online retail markets alone will require an additional 10.2 million sq m of fulfilment and delivery hubs by 2027.
However, retailers are increasingly adopting micro-fulfilment centres and hybrid distribution models to enhance efficiency and reduce last-mile delivery costs and this evolution may have implications for future space requirements as well as location choices.
Richard Laird, co-head of capital markets, Knight Frank Europe, said: “This research underscores the fundamental shifts taking place across the European logistics landscape. With the demand for warehouse and distribution space continuing to grow, investors and occupiers need to adapt to evolving market dynamics. The intersection of demographic trends, urbanisation, and ecommerce, as well as shifting dynamics for trade and manufacturing, will be key to unlocking opportunities and shaping future investment strategies.”
Claire Williams, head of UK and European industrial research at Knight Frank, added: “The structural changes in how we live, shop, and work are placing unprecedented demand on Europe’s logistics infrastructure. While supply chains and distribution networks work across borders, planning decisions are made at a more local level.
“We need to consider the implications of household growth on a broader, pan-European level if we are to provide well-located industrial space to support and accommodate future growth in consumer demand, trade and manufacturing. Understanding these shifting dynamics will also be crucial for businesses looking to future-proof their logistics strategies.”
