A huge increase in urban logistics property space is required across key centre in the UK and Europe in the next few years to meet the exponential growth in eCommerce and the resultant need for last mile delivery in cities according to a new research report from Cushman and Wakefield.
Whilst traditionally those in the property sector have divided property into sectors such as Offices, Industrial, Retail and Residential the continued expansion of eCommerce has seen the emergence of a new every growing sub-sector ‘Urban Logistics Space’ as a result of the rapid growth in parcel deliveries and customers’ demands for same-day delivery.
The Urban Logistics report uses Cushman and Wakefield’s ‘Urban Space Model’ – developed in partnership with P3 Logistics Parks -to quantify total urban logistics space requirements in Europe’s top eCommerce markets based on current and future online sales volumes.
Strong eCommerce growth over the foreseeable future will continue to increase the Business to Consumer segment’s market share. In the last decade the market share of this segment has grown from 40% to over 50% in the UK, and is expected to grow further with parcel volumes expected to grow by over 43% in the next 4 years in the UK.
This model however assumes the availability of suitable space. In most of Europe’s major eCommerce markets there is a wide gap between the model’s estimates of required urban logistics space and actual space.
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 the UK. 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.”
Rob Ladd, Head of Logistics & Industrial at Cushman & Wakefield covering Wales and the South West adds: “It will be crucial for online retailers and parcel companies to use urban logistics space in order to meet rising customer expectations while at the same time reducing delivery costs especially as rents in urban areas are likely to rise due to lack of supply of suitable accommodation. Indeed there are already a number of unsatisfied requirements in the South Wales market which are very location specific but remain unfulfilled due to lack of suitable property options.
“The concern is that although Urban Logistics is undoubtedly a growth area, to stay competitive and meet the ever increasing demand from the consumer, cities across the UK must find solutions to a range of significant constraints such as limited supply, land constraints, competing higher value land uses, opposition from city stakeholders to logistics in urban areas, growing environmental concerns and increased traffic volumes and congestion.”