The European e-commerce sector has stabilised after the fluctuations caused by the coronavirus pandemic and is once again on a growth trajectory. Inflation-adjusted online spending is now only one percent below the 2021 peak. This development is considered by CBRE to be continuously positive, despite a more moderate increase in e-commerce penetration in many European markets. Additional growth potential is identified particularly in the electronics, health and beauty, and online grocery sectors.
Online retail thus remains a key factor for the demand for logistics space in Europe. Concurrently, the increasing integration of online and offline retail is transforming the requirements for retail properties. These insights are based on a current analysis by the global real estate service provider CBRE.
Changes in the retail property market
Frank Emmerich, Head of Retail Germany at CBRE, states that while the era of explosive growth in e-commerce is over, the structural trend continues. This is leading to greater market polarisation in the retail property sector. Retailers are increasingly optimising their branch networks by focusing on high-performing locations and investing more in attractive flagship stores. Primarily, prime retail locations benefit from this, while the differences to secondary locations are likely to widen.
Brick-and-mortar stores are increasingly taking on additional functions in the supply chain, due to the more comprehensive linking of sales channels. For example, they serve to handle click-and-collect offers, process returns, and fulfil online orders. This results in an increasing need for storage and back-of-house space within existing sales areas. Potential impetus for physical retail could also arise from the introduction of return fees, which aim to reduce the costs of returns logistics and motivate customers to drop off returns in stores.
Developments in logistics properties
Significant changes are also observable in the logistics property market. After online retailers temporarily expanded their warehousing capacities during the pandemic, efficiency, automation, and flexibility are now gaining importance. Sarina Schekahn, Head of Industrial & Logistics Leasing Germany, emphasises that despite the post-pandemic normalisation, e-commerce remains a central driver for demand for logistics space in Europe. However, users are currently more selectively seeking modern, automation-ready properties. There is demand for spaces that support robotics, intelligent warehouse technology, and sustainable operating models, while also being flexible for various user groups.
CBRE anticipates that future e-commerce warehouses will be less tailored to individual users than in the past. Standardised and flexibly usable building concepts will gain relevance. This development is intended to improve the long-term marketability of properties.
