Marketing

Logistics real estate – these strategies counteract the lack of space – eCommerce Magazin

It is a fundamental dilemma in the metropolitan regions: On the one hand, retail sales are shifting more and more towards online, which is accelerated by the lockdowns. On the other hand, there is not only a shortage of apartments in the largest German cities, but also commercial space. However, modern urban logistics properties are strategically important for the efficient supply of the last mile for the delivery of goods to the end customer. City logistics units have so far been found, among other things, in business parks close to cities, but now only a few spaces are available in this segment.

New concepts for logistics real estate

Logistics real estate developers and CEP service providers as typical users are therefore increasingly turning to reallocating unused existing space. Both outdated retail properties and parking garages that are temporarily rented and are intended to serve as mobile hubs are under discussion. These decentralized concepts are usually associated with alternative delivery methods, including electric bicycles or scooters. In addition, some e-commerce retailers are changing their own real estate concepts and delivery strategies together with their CEP service providers.

Some market participants are starting to set up so-called delivery stations a little further away from the city center. These can be operated more efficiently and more closely than inner-city hubs. The focus is moving away from the shortest possible routes into the city center and towards highly efficient coordination of goods handling and deliveries.

Other companies like Amazon are concentrating on the vertical step – either in the form of multi-level properties with their own external ramp or by installing concrete false ceilings. To be assessed very critically: The third-party usability of these properties is almost impossible.

Cooperations as part of the solution

An important next step is to enter into cross-company partnerships. A current pilot project between Ford and the Hermes parcel service in London shows how this can work. There delivery vehicles and pedestrian couriers are coordinated via app, which means that ideal handover locations can be automatically determined and faster deliveries can be guaranteed. This will only be the beginning. In the medium term, competing companies will also join forces: For example, a concept is conceivable in which two textile retailers combine their goods that are delivered hanging into individual loads. In this way, both logistics space and vehicles would be used more efficiently. But such innovative concepts and ideas near the city center are not enough. Because even with the central and regional warehouses, i.e. large-scale properties in strategically important locations such as Erfurt or Bad Hersfeld, building plots are becoming scarce.

An approach is currently being tested that could greatly increase the space efficiency of logistics properties: Some providers have started to logistically merge their various sales channels – online, omni-channel stores, traditional shops. This means that both the end customer and the various retail units can be supplied from the same property.

The challenge that has to be solved, however, is to implement two different storage and picking strategies under one roof.

Problem area allocation

There is, however, another problem: even if space is actually available, it is not designated for logistic use in many municipalities, which creates an additional shortage of space. Possible citizens’ initiatives and moderate trade tax revenues compared to other uses also play a role.

In addition to active educational work by logistics and real estate experts, ecological sustainability also plays an important role in increasing acceptance among residents and municipalities. A current study by the Logix initiative shows, for example, how the CO2-neutral operation of a logistics property can be conceptually and structurally implemented. In addition to the potential image improvement, such a construction also corresponds to the environmental goals of many shippers and logistics service providers who want to minimize their ecological footprint.

My conclusion: The possible solutions are therefore very numerous. However, there is no silver bullet for developing ideal real estate concepts. For logistics service providers and retailers, it is more important to develop and implement individual strategies that are both economically and ecologically sustainable. However, not only the location and configuration of the properties play an important role, but also all logistics processes inside and outside the respective property.

Logistics real estate: examples from practice

Rented to Amazon

Garbe Industrial Real Estate rents its existing property in Kaiserslautern to Amazon. The online retailer will operate a distribution center there from summer 2021. The property offers 4,400 square meters of hall space on a 31,000 square meter property. The property is currently being adapted to Amazon’s specifications. Parking spaces for 76 cars and 168 vans will be created on the outside area.

Logistics real estate
Image: Bremer Stuttgart GmbH

51,000 square meters for retail logistics

The investor and developer for logistics real estate GLP rents a 51,000 square meter logistics property to Radial Fulfillment. The provider of technology and services for on-channel retail now has two logistics buildings at its Kassel Unit 3 location, each with a hall area of ​​25,000 square meters. In addition to office and social areas with 700 square meters, Building B also offers a rail connection.

Image: GLP Germany Management GmbH

P3 Logistics Parks builds for Amazon

The new distribution center for Amazon in Neubrandenburg is scheduled to go into operation in autumn 2021. On an area of ​​9,400 square meters, P3 Logistics Park is building a hall according to Amazon’s ideas for modern last-mile concepts. The property should comply with the sustainability goals of P3 and receive the BREEAM rating “very good” – the best-known certification system for sustainable building.

Image: P3 Logistic Parks

Common logistics areas

Euziel, a Chinese company specializing in import and export and one of the major Amazon sellers, has signed a lease for 43,000 square meters with industrial property provider Prologis. The second construction phase of the logistics and office space in Cologne-Niel should be finished in September 2021. In August 2020, the first construction phase was completed on an area of ​​113,000 square meters.

Image: Prologis

Logix logistics real estate initiative

Logix, the Logistics Real Estate Initiative, wants to increase the acceptance and importance of logistics real estate in specialist circles and the general public. For this purpose, logisticians, logistics real estate developers and other companies have come together. Since 2013, Logix has presented the Logix Award for outstanding logistics properties in Germany every two years. This year the award ceremony will take place at the Expo-Real in October in Munich.

Image: Logix

Excess demand shapes the market

According to Colliers, rental and owner-occupier activities in the logistics market in Düsseldorf recorded a take-up of 160,500 square meters in 2020. The result was about 26 percent below the value of the previous year, about half of the average for the past five years (332,500 square meters). Lettings increased due to larger deals from Dachser, Yusen Logistic and online food retailer Picnic.

Image: Who is Danny / shutterstock

Also read: Logistics real estate in Germany – demand for space leads to a record six months.

Logistics real estate, Kuno Neumeier
Image: Logivest

The author Kuno Neumeier is the CEO of Logivest. In 2011, he founded the consulting company, which now operates nationwide in Munich, with a focus on logistics properties and locations.