Sheds could become wanted warehouses for internet retailers

Warehouses located on the edge of European cities could soon be worth a lot of money. That’s because customers nowadays expect from retailers to deliver the goods to them within a day or so. Therefore it’s expected that more and more online retailers want to have distribution sites closer to the customer.

In a world where ecommerce giants like Amazon, Otto Group and Tesco Stores dominate the market and determine what will happen next, smaller retailers can’t afford being left behind. And that’s why in the near future more retailers want to deliver their goods fast and therefore will invest more in industrial estate near heavily populated areas. Such estate is ‘the high street of the future’, says Jonathan Holland, senior manager of Legal & General Property’s industrial fund.

The European Commission announced in February that some 43 percent of EU citizens shop online. That’s an increase of 26 percent compared to the situation six years ago. Over the next five years there’ll be a 12-15 percent growth in online sales across this region, as Forrester Research predicted. Meanwhile, retail property values in Great Britain declined up to 28 percent since 2007. Values in the euro zone countries fell 5 percent over the same period.

So, things are about to change. Online shopping will rise even more and internet retailers are looking for sheds at the edge of big cities they can turnover in warehouses. Something that’s a kind of happening already. For example, Amazon has a huge warehouse in the Scottish town Dunfermline, which is near Edinburgh and also a warehouse in the German town Rheinberg, which is near Duisburg. Marks & Spencer is about to open a warehouse in Castle Donington, a village with a population of around 7000, which is near the East Midlands International Airport and cities like Derby, Nottingham and Leicester.

But these locations are still pretty far away from big population centres (but with good transport links nonetheless). In the future, retailers will look for sites even closer to the big cities. Sixteen kilometers south of central London you have a place like Croydon for example, where there are loads of empty office blocks and the unemployment rate is high. But it’s close to a major highway and large local workforces, so says Amaury Gariel, managing director of CBRE’s European industrial logistics team. Warehouse rents at such sites, that have typically been used by mail delivery firms and food distributors, could easily rise 20 to 40 percent over the next ten years, he says. The times they are a-changin’…