Huge growth in Urban Logistics needed to meet e-commerce demand

Richard Scott, Partner and Head of Logistics and Industrial at Cushman & Wakefield’s Newcastle office

A huge increase in urban logistics property space is required across key centres across Europe in the next few years to meet the exponential growth of eCommerce and the resultant need for last mile delivery in cities, according to a new research report from Cushman & Wakefield.

The Urban Logistics report uses Cushman & Wakefield’s ‘Urban Space Model’ – developed in partnership with P3 Logistic Parks – to quantify total urban logistics space requirements in Europe’s top eCommerce markets based on current and future online sales volumes.

This new property sub-sector, from which the report takes its name, has emerged to meet the rapid growth in parcel deliveries. The ‘Urban Space Model’ expects delivery volumes across Europe to increase by a further 69% by 2021, with variations by market impacting space required. Its methodology includes a number of inputs and assumptions based on actual urban logistics practices and current online transactional data.

In terms of population and buying power, London is the largest and most mature eCommerce market in Europe with a current urban logistics space requirement of 870,000 sq m. This total is expected to exceed 1.2 million sq m in 2021, an increase of 42%.

Lisa Graham, Head of EMEA Logistics Research & Insight, Cushman & Wakefield, said: “As more of us do our shopping online, it’s vital that our large cities have the capability to handle the increase in parcel capacity across Europe. Our Urban Space Model shows that substantial growth is expected across the board. The fact that a 42% rise in the UK is the smallest increase speaks volumes for the direction the market is heading.

“Looking ahead, it will be crucial for online retailers and parcel companies to use urban logistics space in order to meet rising customers’ expectations in terms of speed and reliability of delivery, while at the same time reducing costs in order to justify higher rents.”

Richard Scott, Partner and Head of Logistics and Industrial at Cushman & Wakefield’s Newcastle office comments: “Urban Logistics is in its infancy in Newcastle although we expect it to be a significant growth area in the next 12-24 months. The city centre is relatively small so of the last few mile delivery companies who have established centres such as Amazon have chosen depots on the periphery of the City Centre in locations which benefit from good road links.”