According to a recent report by Savills, an additional 8.6m sq m of warehouse space is required by parcel companies in Europe by 2025 to keep up with growing eCommerce demand.
The figure reflecting the parcel delivery segment’s expected demand for warehouses is impressive. For the sake of comparison, the total warehouse space in Poland, one of Europe’s main logistics markets, amounts to over 20m sq m. That is to say, roughly half of the total Polish warehouse space in the coming years will be held by courier companies alone.
In its research, Savills cites Effigy Consulting data that 12.3 billion parcels were delivered across Europe in 2019. Although there is no pan-European data for 2020 yet, Savills has based its analysis on the average annual growth in parcels in recent years in the UK.
UK regulator OFCOM reports that over 2.8 billion parcels were delivered in the UK alone in 2020. The average annual growth in parcels over the last four years in the Isles is 9.1%.
According to the report, around 1.7m sq m of this essential warehouse space will need to be dedicated to the storage and handling of returns from parcel delivery companies. Savills estimates that around 20% of products bought online will be returned.
Using the UK example again, Savills calculates that the delivery of each million parcels by courier companies creates a demand for around 100 sq m of warehouse space. In the UK, demand for new warehouse space from courier companies reached 6% of total demand in 2020, compared to 3% a year earlier.
Data from Poland confirm this trend. According to Cushman & Wakefield, last year demand in the warehouse market reached a record level of nearly 5m sq m. This represented an increase of 24% year-on-year. Companies operating fully in the eCommerce sector accounted for around 10% of total demand. When considering multi-channel sales companies, it is estimated that eCommerce can collectively generate up to a third of demand.
Moreover, Poland is seeing a dynamic growth in warehouse space: At the end of 2020, more than 2m sq m was under construction, some 100,000 sq m more than a year earlier and almost 500,000 sq m more than at the end of Q3 last year.
Photo credit @ Amazon