Industrial Outdoor Storage in Europe Set for Robust Growth, Says Savills Report

Industrial Outdoor Storage in Europe Set for Robust Growth, Says Savills Report

(IN BRIEF) Savills’ latest Spotlight report predicts substantial expansion in Europe’s industrial outdoor storage (IOS) sector, with a projected annual investment growth rate of 4.5% over the next five years. IOS facilities, designed to accommodate outdoor storage needs for various industries, including manufacturing, logistics, and agriculture, are poised to benefit from factors such as the ongoing e-commerce boom, demand for supply chain resilience post-Covid-19, and increased reliance on outdoor equipment storage. Savills identifies the sector as an attractive investment opportunity, driven by rising demand and limited supply, with potential applications in the energy transition, particularly for electric vehicle and battery storage. Key players have already begun entering the market, further solidifying IOS as a promising real estate sector in Europe.

(PRESS RELEASE) LONDON, 26-Sep-2023 — /EuropaWire/ — Providing space and facilities for businesses that require outdoor storage of goods, equipment and/or vehicles, IOS caters to a wide range of industries. This includes manufacturing, logistics, construction, transportation and agriculture. Located in industrial areas the sites are characterised by a large amount of open land with typical coverage ratios ranging between 20 and 40%.

Whilst the market for IOS varies per location and is affected by different factors, such as local regulations, connectivity and economic conditions, there remains untapped potential in places across Europe. For instance, Savills research, along with land registry data, has pinpointed land that is defined as Industrial Area by the UK Land Class 23 dataset, and calculated that as much as 510 million sq m could be suitable for IOS use.

Kevin Mofid, head of industrial & logistics research at Savills, comments: “There are a number of drivers that suggests we will see further growth within this subsector. First and foremost is the ongoing e-commerce boom across Europe, which has seen the need for additional space especially to manage seasonal fluctuations. This is alongside the vehicles required for same, or next day delivery. Other factors include industries relying on large equipment that needs outdoor storage solutions and a desire by businesses to shore up their supply chains following the Covid-19 pandemic.”

As a result, Savills sees IOS as an attractive investment opportunity, especially with demand for storage space set to increase against a backdrop of low supply. The firm also expects to see considerable rental growth, having gone up by 47% in the UK in 2023 when compared with last year.

Key players are already starting to emerge, particularly in the US where some institutional investors have already entered the market. For example, JP Morgan Global Alternatives and Zenith IOS formed a $700 million joint venture in February 2022, whilst Alterra Property Group closed its Alterra IOS Venture II LP with $524 million in investments. Savills has also seen this start to take place in Europe, with Realterm announcing in May this year the continued growth of its transportation and real estate platform with the acquisition of four IOS facilities. The sites situated in the Netherlands have a total land area of 74,352 sq m.

Marcus de Minckwitz, head of EMEA industrial & logistics at Savills, adds: “IOS represents an exciting opportunity within all European real estate markets and we expect transaction volumes to increase substantially as investors look to aggregate portfolios. There is both constrained supply and increased demand, which is leading to rental growth. These assets are also likely to play an important role in the energy transition as they could be suitable for EV and battery storage. We are just at the beginning of IOS coming through as a sector in its own right in Europe, but the combination of all of these factors makes for a very attractive proposition.”

To read the full report, please visit:

https://www.savills.com/research_articles/255800/352060-0 

Media Contacts:

Kevin Mofid
Head of EMEA Logistics Research, Commercial Research
+44 (0) 20 3618 3612

Marcus de Minckwitz
Head of EMEA Industrial and Logistics, Regional Investment Advisory EMEA Omnichannel Group
+44 (0) 20 7409 8755

SOURCE: Savills plc