A spatial analysis by real estate advisor Savills, for suitable last mile locations in Rotterdam, Amsterdam, The Hague and Utrecht, has uncovered very limited availability.
Moreover, business parks, which are potentially suitable, also appear to have a very limited availability. This means that the current, but also future supply for companies looking for the most favorable locations in the aforementioned cities is limited.
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.
Raymond Frederiks, Research Consultant at Savills in the Netherlands, explains: “The Not In My Backyard (NIMBY) discussion is flaring up, but the number of online purchases is growing nevertheless. The online ordering behavior of consumers leads to a strong increase in the need for last-mile locations. Given the scarce space in the city, it is very important to choose the best strategic locations. Our analysis helps to find space within existing business parks that is suitable for urban distribution with sustainable transport vehicles.”
The demand for last mile logistics consists of different scale levels. At the lowest scale level, the demand consists of ‘Q-Commerce’ services Gorillas, Flink, Zapp and Getir. These are services which guarantee extremely fast delivery times, sometimes even within ten minutes, so they are located with storage space even closer to the end user. This therefore concerns very small take-up with a size of between 250 sq. m. and 1000 sq. m. in city centres. This demand is often met in existing empty retail spaces.
For suppliers with a larger volume for each delivery round, the demand for space is often between 1000 sq. m. and 10,000 sq. m. However, this demand is even more difficult to meet because the competition from other uses is actually greater. In the analysis, Savills Maps has been used to find out what existing business parks in and around the G4 cities in the Netherlands are most suitable for last mile logistics. This suitability has been measured on the basis of various indicators such as:
- Proxitimy to consumers
- Proximity to labour force
- Accessibility
- Availability of land
- Availability of industrial space
- Opportunities and limitations of the zoning plan
Niek Poppelaars, Co-Head Logistics and Industrial at Savills in the Netherlands, explains: “This analysis all the more demonstrates that facilitating the growth of last mile logistics presents a major challenge, and that a true ‘war on land’ is going on. Although a few greenfield developments are still possible, such as in Ridderkerk (Nieuw Reijerwaard) and in Rijswijk (Harnaschpolder), this will not be sufficient. On the one hand, this calls for creative solutions, such as multi storage use of the land. On the other hand, this also offers opportunities for investors to invest in existing business parks.”
Due to the scarcity of land and the continued growth of the sector, interest in logistics property from investors keeps rising. As competition for logistics investments in general is increasing, larger logistics developments on existing business parks close to the major cities, are offering new investment opportunities. Thanks to the additional occupier demand from businesses focussed on transport to the city, the risks are 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.
Douglas van Oers, Co-Head Logistics and Industrial at Savills in the Netherlands, says: “In the first half of 2021, the investment volume for logistics property was already 62% of the total volume in the record year 2020, boosted by the largest single-asset transaction in logistics real estate in the Netherlands to date - Amsterdam Logistics CityHub. As much as approximately 92% of the total investment volume originated from foreign investors. This is mainly because there are numerous foreign fund managers focussing on logistics property that have plenty of capital available and are willing to pay more competitive yields. It is therefore expected that in 2021, logistics property will be the biggest category for the first time in terms of investment volume. I expect this may result in further yield compression, to sub 3.5%.”