Follow us
Select Page

Port warehouses: set for revival

by | Jul 31, 2017

Europe’s logistics real estate markets are firing on all cylinders, but the ‘classic’ category of port warehouses tends to be somewhat overlooked. Nonetheless, market conditions in ports are tight, and the handling of the newest generation of megacarriers is bringing new opportunities for warehousing facilities in Europe’s major ports.

Europe’s logistics real estate markets are firing on all cylinders, but market demand, both from occupiers and investors, is mostly focused on both ends of the ‘demand dumbbell’. On the one hand this involves XXL warehouses, or central distribution facilities at inland centres of gravity, and on the other hand the last mile, building on the need for logistics space in and around cities.

A third ‘classic’ category of logistics assets tends to be overlooked: port warehouses. Admittedly, the role of logistics facilities in European ports has diminished over the years. Improvements in infrastructure and supply chain management have prompted a move inland and have left many ports – if not part of a centrally located metropolitan area – with a niche role to play.

However, a strong growth in size and scale is currently taking place in the terminal operator and container carrier sector. Container vessels are growing in size and the number of ports that can handle them, as well as the number of port calls they make, is shrinking. As a result, Europe’s major ports are increasingly suffering from congestion and the arrival of the newest generation of megacarriers is generally overloading infrastructure and transhipment capacity. Waiting times for inland transport are lengthening and some service providers have resorted to applying surcharges on freight coming from the most heavily congested ports.

This, in turn, is increasing the need for storage and transhipment facilities in these ports. As long as goods are containerized they do not necessarily have to be inside a warehouse, but further pressure on terminal and inland transport capacity will inevitably lead to growing demand for warehousing space. This is especially the case with frozen or other temperature-controlled products.

Simultaneously, such space in and around ports is scarce and vacancy rates are low. Lack of land and stable occupier demand has resulted in little development in recent years. Newcomers are facing competition from established players such as bulk storage operators – a lot of (mostly older) port warehousing space is used for commodity storage and there are frequent peaks in demand stemming from arbitrage plays. Both new development, where possible, and rental growth are conditions to be reckoned with if extra space requirements come into effect.

Although market activity in general will remain focused on the ‘demand dumbbell’, growing occupier demand is to be expected for Europe’s major ports, particularly in the cold storage sector. Developers and investors aiming at stable industrial market performance are advised not to overlook this old but very much alive segment of the market.

Regional office market expectations in 2019

Regional office market expectations in 2019

2018 was an outstanding year of office take-up across the UK regional and SE office markets. Can 2019 reach the same dizzying heights? CBRE’s new UK Office Property Perspective reveals record breaking take-up activity (of nearly 7.5 million sq ft) in...

Smarter Cities 2025

Smarter Cities 2025

The term “smart” can be a prefix for a whole host of things: phones, motorways, tickets, cards, buildings.  And also cities, many of which are making concerted attempts to become smarter as a way of generating a range of economic, social, cultural and...

UK offices: the return of the public sector

UK offices: the return of the public sector

Over the past three years, HMRC have taken over 2.2 million sq ft of new office space across 11 regional centres. But have these deals been pivotal to the success of the UK regional office markets or have they simply added to the already growing...

Financial services: why we can bank on London

Financial services: why we can bank on London

CBRE’s latest London report ‘Why we can bank on London’ explores the three key challenges facing the financial sector: Brexit, changing regulation and the growing influence of fintech. The UK is the most specialised major economy in financial services...

What's happening with Scottish property?

And The Rest: the non-housing highlights of Budget 2017