CBRE l The market for XXL warehouse in Europe
27
XXL WAREHOUSES Europe real estate market 26 th November 2013
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One consequence of the growth in online retailing, and other of operations into fewer larger units: XXL-warehouses. This reflects network optimisation - notably economies of scale, inventory information management, closer links with the customer base strong drivers.
Transcript of CBRE l The market for XXL warehouse in Europe
XXL WAREHOUSES Europe real estate market
26th November 2013
2
XXL WAREHOUSES IN SUPPLY CHAIN CONTEXT
Source: CBRE
3
GENERIC XXL WAREHOUSE FEATURES
Size > 50,000 sq m
XXL WAREHOUSE The retail case
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THE RETAIL CASE FOR XXL WAREHOUSES 1- The centralization and scale of procurement
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THE RETAIL CASE FOR XXL WAREHOUSES 2- Decrease of storage space inside shops
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THE RETAIL CASE FOR XXL WAREHOUSES 3- Evolution in inventory management
Decrease of total inventory
o Increase of delivery services speed and efficiency
o Mutualisation of safety inventories of shop network
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THE RETAIL CASE FOR XXL WAREHOUSES 4- Optimising transport costs via the coordination of deliveries
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THE RETAIL CASE FOR XXL WAREHOUSES 5- Control of Information Flow
BIG DATA
XXL WAREHOUSES The occupiers perspective
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THE OCCUPIERS PERSPECTIVE
Locational Criteria
0% 20% 40% 60% 80% 100%
Accessibility / quality of infrastructure
Labour availability
Proximity to customers
Government incentives / grants
Proximity to producers
XXL Warehouse Advantages
Centralisation of operations (100%)
Economies of scale (80%)
Reduced transport (60%)
Source: CBRE
Percentage of respondents
12
Challenges in developing sites
THE OCCUPIERS PERSPECTIVE
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Availability of large enough sites
Planning/permits issues
Limited supply of sufficientlywell-located sites
Finance/funding issues
Environmental issues
Source: CBRE
Percentage of respondents
13
Europe’s Most Desirable Logistics Locations
LOCATIONS
Source: Prologis Research
MARKET Figures and trends
15
XXL WAREHOUSE TAKE UP IN EUROPE 2010 – H1 2013
1,36 1,20
2,61
1,30
2010 2011 2012 2013 H1
2012 and 2013 account for 14% of total year take up Source: CBRE
Take-up in million sq m
16
XXL WAREHOUSES TAKE UP BY COUNTRY 2010 – H1 2013
0,0%
10,0%
20,0%
30,0%
40,0%
50,0%
60,0%
70,0%
80,0%
90,0%
100,0%
2010 2011 2012 2013
Russia
Czech Republic
Poland
Netherlands
Italy
Germany
France
UK
Source: CBRE
17
XXL WAREHOUSE TAKE UP BY SECTOR 2010 – H1 2013
Food retail 20%
Non-food retail 30%
Online retail 17%
3PL 22%
Manufacturing 8%
Other 3%
Including 3PL’s working for contracted customers, overall
retail demand could be in excess of 80%
Source: CBRE
XXL WAREHOUSE Capital market trends
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Rationality of investment
INVESTMENT CONSIDERATIONS
Strategic asset to serve efficiently more demanding consumers
o Both demand and stock are growing
o Scale and longevity of occupier commitment (10 to 15 years) due to
tenant specific fit-outs costs
High average lot size and cost (ca. €35 m for a 50,000 sqm facility)
Degree of specialism, liquidity, re-letting risks potential are negative
Relationship between size and cost/value is not linear
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XXL WAREHOUSES INVESTMENT DISTRIBUTION Trading activity: 2012 - H1 2013
UK 28%
France 6%
Germany 19%
Netherlands 2%
Spain 7%
CEE 12%
Sweden 20%
Turkey 6%
Source: RCA
€3 billion
19% of the overall
industrial market
Average
transaction size:
€52 million
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INVESTMENT CONSIDERATIONS
Increase of money allocation 2013 vs 2012
60% additional traded volumes: yields are compressing
Evidence from Asia-Pac and USA indicates strong demand and pricing
Advantageous for investors
o sub 7% in core Western Europe
o and low 7%’s in core CEE
Additional capital entering the sector through funding of build-to-suits
22
Conclusion
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“ A vital advantage of XXL-warehouses is that they allow
the ability to operate multiple client contracts from a
single location.
This does impose additional demands in terms of
locational criteria, financial resources and strategic asset
planning, but it also brings great value and flexibility
benefits to clients.
For instance it allows shared use of trucks and
better management of volume fluctuations.”
Jean Poujol, CFO
FM Holdings
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“ Given the size of site involved and the degree of
specialism required by many occupiers, deliverability is
critical and includes quality of motorway access and
likelihood of securing planning permission.
The ability to manage the whole development process,
and hence develop quickly enough on a build-to-suit
basis, is a key requirement in satisfying occupier needs.”
Nigel Godfrey, Senior Vice President
Gazeley
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“ We see a structural shift towards XXL-warehouses, and
they form a key element of our investment strategy.
Currently we would require a yield premium over smaller
warehouse assets to reflect additional risks relating to
liquidity and re-letting, although it is possible that these
will diminish as the sector matures”
Remy Vertupier, Fund Manager
LOGISTIS, AEW Europe
26
2012-2013
EUROPEAN XXL WAREHOUSE LEASING TRANSACTIONS
Source: Arial 8pt, Dark Grey
Date Location Size (sq m) Occupier Sector
Jun-13 Heudebouville, France 53,000 Intermarché Food retail
Sep-12 Stryków, Poland 56,000 Leroy Merlin Non-food retail
Jun-12 Monticelli, Italy 57,000 Gruppo Scerni 3PL
Aug-13 Derby, UK 58,715 Kuehne & Nagel 3PL
Feb-13 Milton Keynes, UK 62,710 John Lewis Non-food retail
Apr-13 St Joost, Netherlands 77,000 Action Non-food retail
Jan-13 Karlsruhe, Germany 85,340 Daimler Manufacturing
Feb-12 Reading, UK 86,558 Tesco Food retail
Oct-12 Daventry, UK 92,903 Sainsbury plc Food retail
Jun-13 Saint-Martin-de-Crau, France 117,000 Castorama Non-food retail
T +33 1 53 64 36 85
M +33 6 08 18 39 58
For more information regarding this presentation please contact: Amaury Gariel, SIOR
Managing Director
CBRE l EMEA Industrial & Logistics
