Online trade lacks space for storage

Status: 01/26/2022 2:09 p.m

Online retail is one of the winners of the pandemic. But there could soon be bottlenecks in delivery. Because there is a lack of warehouses. Municipalities often do not want new logistics properties.

The need is huge: The Federal Association of Forwarding and Logistics expects that around four million square meters of additional storage space will be needed by 2025. The main reason is the growing online trade. But the land is becoming increasingly difficult to obtain. Because more and more municipalities are rejecting the construction of warehouses and distribution centers. They often expect too little tax revenue and a burden for local residents, for example through additional traffic.

An example is Magdeburg. There, the city parliament decided at the beginning of November to only allow “high-quality” trade in a commercial area. That didn’t mean logistics. In the east Hessian municipality of Friedewald, the meeting of municipal representatives decided in spring 2021 not to accept any logistics companies in the local industrial park.

Lack of logistics space

Germany is facing a shortage of logistics space – and this at a time when more and more of this space is needed. “We continue to expect extremely high demand for industrial and logistics real estate space in 2022,” says Rainer Koepke, head of logistics at the real estate consultancy CBRE. “Especially in the old federal states, the demand does not meet a sufficient supply – this applies above all to the regions around Frankfurt am Main and Hamburg as well as to almost the entire southern German area.”

The revitalization of fallow land is becoming more and more important, because municipalities are showing fewer plots of land on the “green field”. In addition, the federal government has announced the goal that the sealing of previously undeveloped areas should be a maximum of 30 hectares per day by 2030. According to Koepke, it is currently about twice as much.

Large logistics properties in particular can only be obtained if online retailers develop them themselves with a real estate partner, reports Frank Düssler from the Federal Association of e-Commerce. The consequences are already being felt. “What is scarce is expensive. Rents and prices for logistics space have been rising for years. In the worst case, this can mean that companies can no longer settle,” says Düssler.

Locations become less attractive

Real estate expert Köpke also sees problems for the regions. If companies cannot find sufficient logistics space, this could make the affected location less attractive for companies, since corresponding growth on site is no longer possible. Local shortages are having a negative impact on economic growth.

New storage areas are also required due to the corona pandemic. As a result of supply chains that have come under massive pressure, industry and trade are currently rethinking their procurement structures and filling stocks primarily with semi-finished and finished goods, according to Frank Huster, General Manager of the Federal Association of Forwarding and Logistics DSLV. This creates an additional need for storage space.

Empty stores as city warehouses?

Solutions must now come from both sides, says Düssler – not just from the municipalities, but also from the real estate developers who set up the camps. “A nice side effect of scarcity is that it can make you creative. For example, some developers have started to build larger distribution centers with two floors in order to be able to use the limited space more optimally,” says Düssler. “In the inner cities, the owners of department stores and shopping centers are planning to convert retail space that is no longer required into small city warehouses instead of building new logistics buildings from scratch.”

However, real estate expert Rainer Koepke puts it into perspective: The construction costs per square meter of logistics space are significantly higher for multi-storey logistics properties. “And this means that the rents to be paid are also increasing. However, since the margins in the logistics industry are very low, the logistics companies would have to pass these increased rents on to their customers. Multi-storey logistics properties in Germany are therefore only very rarely worthwhile.”

Halls are built sustainably

According to Koepke, the logistics real estate industry is making great efforts to meet the wishes of the municipalities. Municipalities are in the comfortable position of being able to select the most attractive concepts. “This is one of the reasons why sustainability is now very much in focus: from green roofs or roofs equipped with photovoltaic systems, to optimized building technology and control for the most energy-saving building operation possible, to sustainable building materials such as laminated wood trusses instead of steel or concrete beams,” says Koepke.

Dealers’ complex supply chains require very different types of warehouses. “It begins with the large central warehouses that are built at important traffic junctions on greenfield sites or on industrial sites and are used as transhipment points in the cities,” says Düssler. Much smaller, more central warehouses would be needed in the cities. However, all warehouses have one thing in common: space is scarce everywhere.

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