Belgium comes top in a ranking of the best countries in Europe to locate a distribution or logistics center, according to the European Distribution Report, published by Cushman & Wakefield Healey & Baker (C&W/H&B), which operates the European division of global real estate consultant Cushman & Wakefield.
The new department of GSK Biologicals in the Wavre-Nord Industrial Zone.
When considering a range of cost, access and property factors, Belgium retains its title since the last report. Belgiums strengths are its low rents and good accessibility. In second place, comes France, which has lower building costs and land prices than Belgium and scores well in terms of property and market size, followed by The Netherlands, where there has been a relative improvement in cost competitiveness.
The Central European locations have all moved up the ranking; Czech Republic to 4th place, Poland to 5th and Hungary to 7th. The expansion of Central Europes industrial and logistics sectors has put an eastern stretch in Europes distribution banana, says Nigel Rowe, C&W/H&Bs Head of European Industrial & Logistics.
Ferdinand Hlobil, C&W/H&Bs Regional Head of Central European Industrial & Logistics, adds: European Union membership in 2004 has given a huge push to the Czech Republic, Hungary and Poland. These countries are benefiting from the continuing move of European production from Western Europe and the expansion of the regions logistics markets, helped by the regions low costs compared with Western Europe, the growth of the retail sector in these new member countries and their improving transport networks.
In terms of individual factors, Poland has the lowest property costs, Russia the lowest labour costs, Belgium the best access, the UK the largest freight market and Austria the best land/property supply ratio.
Industrial/logistics rises up the business agenda
The cost focus has shifted to transportation (time and cost), labour (wages, availability and hidden social costs), communication (software and systems) and process management of the goods themselves, the report explains. The decision of where to locate production and logistics capabilities has moved up from just resting with the real estate team to become part of a companys core business strategy, says Nigel.
This is against a background of:
- The globalisation of manufacturing, procurement and distribution.
- Occupiers, and in particular retailers, increasingly scrutinising every aspect of their supply chain to boost competitiveness.
- Consolidation and rationalisation among logistics operators.
- Access to labour now rivals transport infrastructure and shipment destination as a key factor for industrial/logistics locations.
- The concept of third party logistics has spread and fourth party logistics has arrived (supply chain management but no underlying logistics services).
- New technology is opening the way for the centralisation of coordination rather then a physical centralisation in one European distribution center
Investors drive the market
The industrial/logistics property market is being driven by investors, says Nigel: Investors will consider almost any market or location provided that units are let for a significant period to a good tenant. This is pushing down yields across Europe, in particular in France, Poland and Denmark.
Shortage of prime space for occupiers
Supply of prime space is very tight across both Western and Central Europe as occupiers look to upgrade or move to modern, cost effective space. In Central Europe, this has increasingly turned occupiers to locate in secondary cities and transport hubs because of a lack of suitable space in the main cities.
Rents have now bottomed out
Rental levels in Central Europe have been decreasing, but the perception now is that the market has bottomed out, says Nigel, while in Western Europe the market is largely static with signs of growth in certain areas, such as Amsterdam, Milan and Moscow.