Thursday 23 October 2014

Huge demand for XXL warehouses

Tara Fitzsimons

Published 28/11/2013 | 20:44

Ultra large warehouses are in massive demand
Ultra large warehouses are in massive demand

ULTRA large warehouses are in massive demand now, as online retailers look for more and more space.

A new report from CBRE has found that the changes in supply chains and online retailing in particular has contributed to contributing to a significant increase in demand for XXL warehouses (warehouses more than 50,000sqm).

A range of factors is driving the remodelling of logistics networks, such as a growth in the number of product lines and order complexity, customer demand for quicker delivery times, and the need for flexibility to cope with demand volatility, say the firm.

"These are particularly relevant for supply chains that support growth in online retailing.

"Occupier demand for larger schemes also reflects a growing realisation that supply chains, when efficiently managed, are a strategic asset that can boost profitability for retailers and others," the firm adds.

Take-up of XXL warehouses in Europe has topped 44 million sqm in the 18 months since the beginning of 2012. This represents around 14pc of the total industrial market compared with a mere 5pc or 6pc between 2010 and 2011.

In the major European markets, take-up of XXL warehouses rose to over 2.5 million sqm in 2012 and is running at a similar level in the first half of 2013. Take-up had previously been running at no more than 1.5 million sqm per year.

While the UK, France and Germany dominate, XXL warehouses are accounting for a growing proportion of total leasing activity throughout Europe.

Garrett McClean, Head of Industrial and Logistics at CBRE Ireland, commented: "We are undoubtedly seeing growth in demand for XXL warehouses arising from supply chain reconfiguration and the consolidation of operations into fewer, larger centralised hubs."

"These hubs supply a large hinterland area more cost-effectively than might be possible from traditional networks," he added.

Irish Independent

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