According to Savills latest research report, Europe is to see an additional 11.6 million sq m of warehouse demand due to the manufacturing sector by the end of 2022, based on Capital Economics forecasts data.
Take up in the European manufacturing sector has grown significantly over recent years, rising from 2 million sq m in 2012 to 4 million sq m in 2019, according to the international real estate advisor. Even though take up is expected to be slightly lower in 2020, it is anticipated to surpass 4 million sq m in 2021 again and then continue to rise.
Over the past five years, the UK has attracted £148 billion of private manufacturing investment, creating demand for 2.4 million sq m of warehouse space. This indicates that for every £1 billion of private manufacturing investment, this creates new demand for 175,000 sq ft of warehouse space.
Marcus de Minckwitz, Director, Savills Regional Investment Advisory EMEA, says: “The European manufacturing sector accounts for the same proportion of logistics take up as in the UK at 14%. Although this varies by country, we have observed comparable or higher proportions of take up across Central and Eastern Europe with 35% in the Czech Republic and 14% in Poland, which would suggest that our forecasts appear conservative.”
Poland attracted close to PLN 125 billion of private manufacturing investment in 2017-2018, generating demand for approximately 1.1 million sq m of warehouse and industrial space in that period. It can therefore be assumed that every PLN 1 billion of private manufacturing investment creates demand for around 8,600 sq m of leasable space.
Kamil Szymański, Head of the Industrial Agency, Savills Poland, says: “The Polish light manufacturing sector accounts for a stable proportion of industrial take-up at approximately 14%, making it one of the key industries on the logistics leasing market. Some manufacturers opt for owner-occupation rather than leasing, but this model also indirectly generates demand for space to let. Their business partners will often choose to lease warehouse and industrial space in nearby industrial parks to cut delivery times.”
Mike Barnes, European Research Associate at Savills, adds: “If, in the short term, companies adopt nearshoring policies to insulate themselves from future supply chain disruption, it is likely that European manufacturing will increase, which in turn will create a ripple effect for warehouse demand. If the forecasts from Capital Economics are just 20% higher then an additional 13.9 million sq m of traditional warehouse space will be required across Europe by 2022.”
