Grinds Across Europe
By Patricia LeMarechal, SIOR, BSC (Hons), MRICS, and
Andrew Smith, SIOR, FRICS, MBA
There is no doubting that for industrial SIOR’s
across Europe, the last couple of years have been
challenging - volumes down significantly in 2009,
some recovery in 2010 and in 2011 the Euro debt
issues causing renewed nervousness.
Controlling cost has been one of the main drivers to relocations and space take-up, especially
those looking to greener and more efficient buildings. Manufacturing has seen less activity due to
the cost of the relocation in setting up a new plant.
As a result they tend to focus on areas of disadvantage where production could be cheaper.
The development of Europe’s logistics and
industrial property markets is strongly linked to
trends in manufacturing and retail activities across
the continent. As manufacturing grows it generates
a high demand and requirements for warehouses.
However, industrial and logistics occupiers tend to
scrutinize all the elements of their base cost more
closely, and have been looking to take advantage
of the cumulatively fragile condition of the economy worldwide.
Location continues to be the driving factor for
logistics occupiers, especially the low cost countries in Central and Eastern Europe. Demand is
mainly concentrated on properties that provide
access to transport links enabling easy distribution
of goods across Europe and beyond.
Until 2000 the European logistics market was
mainly focused on the area in and around the
Benelux region, which was an important gateway
to the rest of Europe, and includes major transport hubs such as Amsterdam’s Schiphol airport
and the seaports of Rotterdam and Antwerp. In
the last decade however, occupiers have changed
their focus towards the East, because of the lower
labour and build costs available.
The recession of 2009 reflected a sharp decline
in manufacturing output and world trade across
Europe. Overall GDP fell 4. 1 percent in Western
Europe and 5. 9 percent in Eastern Europe in 2009,
year-on-year. A gradual recovery was established
in 2010, assisted by monetary and fiscal stimulus.
The low interest rate policy has boosted perfor-
mance in Europe’s big manufacturers - Germany
in particular has benefited from this and experi-
enced 3. 5 percent GDP growth in 2010 with an