Colliers Copenhagen Property Market Report 2019

Industrial & logistics – Market Report 2019

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DKK 46.7bn physical goods sold through e-commerce channels in 2018 10% growth in physical goods sold via e-commerce channels in 2018 on 2017 25-30% last mile distribution costs as share of total transport costs

Online shopping supports favourable logistics development In 2018, online sales are expected to reach an all-time high of DKK 134bn, up by 16% on 2017, with e-commerce becoming an increasingly integrated part of consumer patterns. This is supported by the 334% surge in online sales from 2010 to 2018. Still, online sales involving physical goods account for only 35% of total online sales today, whereas travels and other services account for 65%. Online grocery sales in particular are expected to grow in future. In 2016, only 14% of the Danish population bought their daily groceries online. In 2018, the figure had increased to 21%. According to a DIBS survey, online shopping is gaining ground mainly because it is convenient and saves time. Today’s online sale of goods is raising the efficiency standards required of so-called last mile distribution, estimated to account for some 25-30% of aggregate factory-to-con- sumer freight costs. We expect to see stricter demands for quick delivery in future, with last mile distribution becoming an even weightier parameter. The mounting volume of goods sold online today not only includes bargain hunts for specialty goods such as home electronics and clothes, etc., but also daily groceries as previously mentioned, from busi- nesses with a digital business platform. Last mile distribution centres to ensure quick delivery The demand for quick delivery within scheduled time slots is essential in terms of groceries, but quick delivery is also a quality parameter applied to traditional specialty goods, where the customer can track the movement of an article from storage to home via track-and-trace functionality. Because of this development, centrally located distri- bution facilities near large residential areas around Copenhagen are expected to attract stronger demand, but so are facilities designed for the delivery of groceries, where the layout effectively supports the flow right from goods delivery by truck over picking of goods and loading onto vans for delivery to end-user. This requires more on-site staff than traditional logistics facilities, translating into higher demands for parking facilities and access to public transport. Aarstiderne and Nemlig.com, grocery retailers with a digital business platform, have settled in Hvidovre and Brøndby, respectively, close to main arterial roads to ensure quick delivery. In addition, international online shopping giant Amazon is likely to enter the Danish market within the next couple of years following its rapid expansion in both northern Germany and Poland. Offering home deliveries within two-hour time slots, Amazon typically requires centrally located logistics facilities for last mile distribution. Although already in short supply, well-located logistics properties facilitating the effi- cient handling of goods for last mile distribution will attract increasing demand in the years ahead. In terms of goods delivery to the dense urban districts stretching from Ring Road 3 to the city centre, several existing business areas are poised to become part of the future transport structure. These include areas at Ejby Industrivej, Mileparken, Smedeland, Midtager and not least Avedøre Holme, where mounting demand has in fact prompted a new masterplan proposal.

Note: Based on interim estimate from DIBS 2018 report. Sources: DIBS by nets, Colliers International