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DACH Industrial & Logistics Property: key takeaways from the Edison Group report

Logistics is the foundation of e-commerce activity. This market is well-developed in the DACH region. But what’s the logistics situation? Does the great popularity of e-commerce go hand in hand with logistics? Are there any trends? Do all DACH countries approach logistics same way? We will try to answer these and other questions by analyzing the report by Edison Group. We will provide only a few highlights; feel free to read more here if you’re interested.

Logistics and industrial property market go hand in hand

In this report, we learn that the logistics market is closely related to the industrial property market. Currently, we can observe a phenomenon in which there is a shortage of supply. And this, in turn, drives the real estate market. The percentage of logistics vacancies on the DACH market has never been so low. This is the best proof of how popular the logistics industry has become in the DACH market. In addition to the growing demand related to the popularization of e-commerce, logistics in DACH countries are also affected by restrictive economic regulations, an unattractive lease option, rising prices on the construction market, and the lack of labor in this sector. It all ends up making logistics one of the best and most difficult investments in the DACH countries.

E-commerce drives logistics

As the tab above presents, the value of e-commerce is constantly increasing. That means that logistics is needed. More orders mean greater demand for shipment of consumers’ orders. It sounds logical, and it translates into reality.

Other aspects that determine logistics are e.g., the tendency of retailers and producers to outsource the subsequent stages of shipment to logistics companies, increasing competition in the e-commerce industry, and consumer requirements regarding delivery speed.

What matters the most is the location – Germany

One of the best localizations for logistics is Germany. It is located at the heart of Europe, so it has a good connection with both Western and Eastern Europe. You can see that the country’s potential is being used. In Germany, there are logistics hubs in such cities as Munich, Hamburg, Berlin, Leipzig, Düsseldorf, Cologne, and Frankfurt.

In the last quarter of 2018, Berlin and Munich were leaders in the German and continental offer in terms of warehouses above 5,000 sq m. The rates were EUR 84 and EUR 86 per year. The availability of logistics space is the lowest in Hamburg, but it is not so conveniently located, which is why the rent there was EUR 72 for the year. Brexit contributes to the optimistic development of the situation – many shippers and suppliers want to move their hubs from the UK to Europe. And Germany seems to be a golden shot.

Switzerland – big changes are coming 

The high cost of land in Switzerland and the topography do not make it so attractive for the logistics industry. However, cross-border trade and the export industry are still quite important industries there. The aspect of the specificity of logistics is quite essential here – about 60% of revenues in this sector are generated from mass shipments, which are transported to the end customer without the usage of warehouses. Swiss Posts still plays an important role here and perceives as the leader in the courier services industry.

Proposed Swiss Cargo Sous Terrain tunnel plan

Most of the logistics is located in the transport corridor connecting St. Gallen with Geneva. Low supply makes rental prices quite high (up to EUR 93). In the report, we can read about two potential solutions for Switzerland. The first option is to develop Amazon in this market. The second is to focus on Cargo Sous Terrain plans and build an underground logistics system along the country’s eastern border, which would revolutionize the country’s logistics. 

Austria – focus on city hub

When it comes to Austria – it is the largest logistics hub – above 5,000 sqm warehouses. Logistics in this country is located outside Vienna. It is focused around the capital city, but there are some smaller logistics centers, too. It is situated mainly on the major east-west transport corridor and in the city of Graz (Southern Austria). Below you can see all hubs in Austria.

source: https://www.bmk.gv.at/en/topics/mobility/transportation/hubs.html

Austria is an important factor while it comes to international transit (geographic aspect). This country has direct rail and road links via its borders with seven countries. It sounds like a logistics dream. Nowadays, Vienna has fierce competitors in this part of Europe like Bratislava or Budapest, but it seems that its position is not threatened. Thanks to high-efficiency transport and high-quality infrastructure in 2018, it maintained a high place (fourth) in the UN world logistics performance rankings. 

To sum up 

DACH countries have great potential. You can see that they use it very well. Germany is definitely the leader here, but Austria and Switzerland are not lagging behind when it comes to using what they have. The fact is that the DACH countries are targeted by foreign shippers who aimed in the European market. If you want to deepen your knowledge on this topic, the Edison Group report is rich in it.