The industrial real estate market plays a major role in the successful implementation and expansion of omni-channel retail, which represents the next major transformation of the logistics property market.
The power of omni-channel retail
Retailers who have successfully implemented an omni-channel retail strategy are continuing to benefit significantly from sales increases, domestically and internationally.
In Germany, for example, a Deloitte study showed stronger retail gains for companies in the domestic appliance market using an omni-channel approach compared to traditional brick-and-mortar companies: 18% versus 3% respectively. A significant contributing factor is purchases from abroad, for which 27% of the European Union have purchased goods online from a German-based retailer totaling more than €3bn. The UK is experiencing equally impressive online export sales, which are expected to grow from €4.9bn (£3.8bn) in 2013 to €12.5bn (£9.6bn) in 2017.
Since 2008, the industry has experienced between 12% and 18% growth across the EU. In 2014, 2.5 million Europeans were employed directly by the sector, producing €424bn in revenue. The industry is expected to double its turnover in the next five years. The growth of the sector will require several million square metres of additional logistics space. Goodman itself is on track to deliver more than 1.5 million m² of logistics space for the e-commerce sector across Europe.
Innovative logistics solutions
Logistics real estate solutions will need to be as diverse and flexible as the omni-channel strategies developed by retailers. Developers will be challenged to find suitable locations while being confronted with growing land scarcity across key European markets, requiring retailers and developers to work together to develop innovative solutions.
In the coming years, there will be a greater focus on how the location and the property together provide the lowest possible unit cost delivery to the customer in the shortest amount of time. Goodman is already working with a number of customers in various sectors to deliver designs that can maximize space and operational efficiency as well as address challenges posed by land scarcity.
These fundamental changes in the retail industry will create a new asset class that is versatile and attractive to both customers and investors. Developers who can respond to these challenges with expertise, speed and flexibility without compromising on absolute quality will gain the greatest rewards.
The full article can be found in the Europe Real Estate 2015 reference book. Purchase the book in the webshop.
Goodman is an integrated property group that owns, develops and manages logistics and business space across Continental Europe, the United Kingdom, the Asia-Pacific region, North America and Brazil. The Group invests in industrial estates and warehouse and distribution centres. With total assets under management of €20.2bn and 418 properties under management, Goodman is the largest industrial listed property group on the Australian Securities Exchange, and one of the largest listed specialist fund managers globally. Its market insight and dedicated local teams create sound investment opportunities and develop properties and environments that meet each client’s individual requirements.