Cee Logistics, Distribution Markets Lag Behind Retailer Expansion Report
The Central and Eastern European (CEE) region has emerged as the focus for major growth in the logistics property market over the next few years, and thus an opportunity for investors and developers, according to the latest report by CB Richard Ellis on industrial and logistics property.
Consumer spending over the next five years is forecast to grow much more rapidly across the CEE markets than in Western Europe. This, combined with high rates of growth in capital expenditure further fuelling economic expansion, is likely to result in a sharp increase in demand for distribution and logistics centres, linked to high growth in the presence of international retailers in the area.
This expected growth has material implications for the logistics sector. The representation of major international retailers in CEE is currently very uneven, but has enormous expansion potential alongside the growth of modern shopping centre stock. Consequently, the report takes a detailed look at shopping centre development across CEE, and in most markets there is scope for substantial increases in shopping centre provision over the next two to three years. In some countries such as Serbia, the development pipeline, which is set to increase current stock by more than four times, will fundamentally alter the structure of retailing. Other markets likely to see similar shifts include Bulgaria, Russia and Slovakia, which are expected to at least double their shopping centre stock by 2010.
But logistics development is not keeping pace, according to the report. Based on CB Richard Ellis’ analysis of shopping centre expansion, the market will require an additional 13 million sq m of logistics space to cope with the projected growth in retail floorspace. Based on the currently identifiable pipeline, this would mean that retailers would need to take nearly twice as much of the logistics pipeline as they do of current stock. Countries where this is particularly acute include Poland, the Czech Republic, Bulgaria, Romania, Hungary and Slovakia.
Commenting on the report, CB Richard Ellis managing director CEE for industrial property and logistics, John Palmer, said: “As Central and Eastern European markets grow in strength they also grow in wealth that stimulates consumer expenditure to be serviced by retailers. Growth in infrastructure, especially road infrastructure, is in turn creating significant opportunities for logistics development.”