Cross border investors responsible for 92% of activity in Dutch logistics market, H1

According to international real estate advisor Savills, the first six months of this year have witnessed €635 million invested into the Dutch logistics real estate sector, a yoy increase of 12%. The company, who have today published a spotlight on the logistics property market in the Netherlands, confirms that foreign buyers have dominated investment activity during H1, and are accountable for 92% of all transactions, compared to 69% in 2015.

The UK has US have been leading the investment charge into the Dutch logistics market this year, accountable for 23% and 17% respectively of the total volume of cross border investment in H1. Australia (14%), Belgium (11%) and a UK/German JV (13%) have also been significantly active in this market.

“The growth of the Dutch economy is having extremely positive effects on the logistics real estate industry and the Netherlands ranks fourth in this year’s World Logistic Performance Index, justifying its strong attraction to global investors,” comments Douglas van Oers, associate director, Logistics & Industrial Agency, Savills Netherlands. “The increase in volume can  be much attributed to the increase in logistic portfolios being transacted. While they only accounted for 5-20% of the transacted volumes in previous years, from 2013 onwards portfolio deals have constituted  roughly half of the total volume transacted.”

Savills also highlights that increasing demand from retailers and service providers for distribution centres has resulted in a record take-up of 710,000 square meters in the first half of 2016 and a vacancy rate of less than 5%.

“Demand for logistics services in the Netherlands is increasing due to the ongoing global growth of e-commerce,” comments Niek Poppelaars, associate director, Logistics & Industrial Agency, Savills Netherlands. “As consumers are increasingly ordering their goods online, retailers and logistics service providers are having to adapt to the ‘Amazonification’ of the industry, particularly in line with the growing trend in ‘last mile’ delivery.”
The rise of e-commerce has also resulted in a large number of new industrial developments,partly speculative, but mostly logistics centers of over 40,000 sq m, suitable for online retailers. The city of Venlo, a city in the southeastern Netherlands, has been particularly popular, as both land prices and construction costs are relatively inexpensive.

Demand for logistics property has continued in Q3, with Savills IM, buying a 3 unit portfolio for € 77 million, Exeter Property buying a 63,000 sq m centre in Venray for € 36 million, CBRE GI investing in a sale-and-lease-back transaction in Born for € 28 million and Standard Life purchasing almost 38,000 sq m of logistics space at Schiphol. “While there are still a few portfolios on the market, the focus has shifted to large singles asset deals and by the end of the year Savills forecasts the total volume to reach around € 1.1 billion. The high level of investor interest is putting downward pressure on yields, says Niek Poppelaars. “Since the yields have already been decreasing over the past two years, further contraction is likely to be limited."

Savills also states that trends in ‘last mile delivery’ are driving future requirements for smaller warehouses on the periphery of major cities. The ‘last mile’ is the most expensive part of the delivery process and the larger retailers, such as Amazon and Google, large enough in their core markets to do all deliveries without the help of a third part, are competing to optimise customer satisfaction by delivering in evenings, within clearly defined time slots and also with one-hour delivery. For this to be effective, proximity of retail warehouses to urban centres is essential and several Dutch e-commerce retailers like Coolblue are therefore actively scouting for distribution centres of 1,000 to 2,000 sq m within cities.

Click here to see Savills spotlight on the logistics property market in The Netherlands