Pan-European Warehouse Opportunity amidst Accelerating Online Sales

Clarion Partners highlights global trends in their 2021 retail real estate outlook.

    Tim Wang, Ph.D.,

    Tim Wang, Ph.D., Head of Investment Research, Clarion Partners

    Julie Laumont

    Julie LaumontSr. Research Associate, Clarion Partners

    A Re-Acceleration of E-Commerce Globally

    Omnichannel retail continues to drive rapid transformation in worldwide supply chains and logistics real estate. Recently, the global COVID-19 pandemic has dramatically accelerated e-commerce penetration rates and sales growth. Throughout Europe and the United States, e-commerce as a percentage of total core retail sales was approximately 15% in 2019.1 This share rose precipitously following the onset of COVID-19 in many countries worldwide. Globally, the e-commerce market share could rise to almost 25% by 2023 (or even 45% by 2030), as online sales have continued to grow at a double-digit rate.2 Thus, demand for industrial warehouse and distribution property is expected to remain strong in the years ahead.3 

    Clarion Partners believes the future expansion of global logistics real estate will be especially robust in Europe, given that institutional-quality property markets there are less developed overall than the U.S. despite that the EU region has both a higher total population and population density than the US.4

    A few universal global trends should continue to drive the EU warehouse market expansion:

    • Rising global consumption and trade;
    • Last-mile infrastructure for fast delivery serving the urban logistics boom;
    • A growing dominance of large retailers (e.g. Amazon, Walmart, and Apple); and,
    • The more recent e-grocery boom.

    Early Innings for European Industrial Property

    Today, the U.S. is the largest commercial real estate (CRE) market in the world, and industrial property accounts for approximately 20% of overall CRE investment.5 It is still relatively early in the build-out of European e-commerce infrastructure. Online sales as a share of total core retail sales vary greatly by country with a few laggards (e.g. Spain, Italy, Austria, Switzerland, Norway, Belgium, France) now ranging between 6% and 11%.6 At the same time, recent reports indicate low Class A vacancy and a general undersupply of modern warehouse inventory in many European countries overall. In Q2 2020, the average European market vacancy rate was 4.0%.7 In Europe, as well as in the U.S., it has been estimated that USD $1 billion in new e-commerce sales ≈ 1.25 million square feet of new warehouse demand, and it is expected that e-commerce and third-party logistics tenants will continue to drive much of industrial leasing over the next few years.8

    In 2019, industrial property represented about 10% of all $1.7 trillion transaction volume worldwide. To date, the U.S. has attracted a much larger share of logistics capital investment; however, the EMEA region has gained traction in recent years. Recently, investment sales in Europe reached the strongest levels on record.

    European Industrial Markets to Benefit from More Online Sales & Global Trade

    Europe holds a tremendous amount of wealth and enduring buying power, which should continue to benefit future warehouse demand. Clarion Partners believes Europe, in particular, is well-positioned to benefit from high-growth economies in both Western and Eastern Europe and expanding global trade due to its relative proximity to emerging markets in the Middle East, Africa, Russia, and Asia. European industrial real estate property fundamentals have been very strong, in our view, with record low inventory and average rents at all-time highs.9


    1. U.S. Census Bureau, Savills, 2020.

    2. eMarketer. May 2019. Note: The U.S. e-commerce market share of 45% by 2030 is based on U.S. in a CBRE forecast released in August 2020.

    3. eMarketer. May 2019.

    4. MSCI. 2020.

    5. NCREIF, Clarion Partners Investment Research, August 2020. Note: 1) ODCE = NCREIF Open-End Diversified Core Equity Index. 2) Based on institutional-quality assets.

    6. CBRE. EMEA Industrial & Logistics – European Leasing Market Snapshot. Q2 2020.

    7. CBRE-EA, Jones Lang LaSalle, Green Street Advisors. Q1 2020.

    8. CBRE. Q2

    9. CBRE-EA, Q1 2019. Note: Source for U.S. 2) Jones Lang LaSalle, Q3 2018.


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