The fit man of Europe

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When Swiss-based transport company Kuehne & Nagel acquired ACR Logistics, its obvious aim was to expand its global network further into the logistically fashionable Eastern Europe and Asia. But ACR has a leading market position in the Benelux countries as well as several other European locations. And although it is ACR’s client base in Eastern Europe and Asia that K&N says it wants, its consolidation of warehousing in Benelux will have a useful effect on its bottom line.

At the same time, Danish company DSV is rumoured to be in talks about a possible merger with Dutch firm Frans Maas. And the queen of Dutch distribution, TNT, has said it wants to divest its logistics arm and concentrate on the parcels and express market. Add all these market movements together and Benelux is in for a bashing.

But this is no bad thing. There is no reason to suppose that the rationalisation in the 3PL sector will leave any market less healthy than it was. And underpinning Benelux is the usual raft of strong, healthy deals. ProLogis for example, has just leased 380,000 sq ft (35,300 sq m) in Belgium to Decathlon. The European retailer of consumer sports equipment and apparel has taken the space at ProLogis Park Willebroek in the Brussels-Antwerp metropolitan corridor. The park will function as a distribution centre for Decathlon, serving markets across Western Europe and the United Kingdom.

The Benelux market expects to see more deals like Decathlon in 2006. GDP expectations for the Netherlands and Belgium are good after a weak 2005.

Savills’ latest research on the Netherlands warehousing markets says that demand for logistics space remained strong in 2005, mainly supported by the rise in exports and the country’s geographical characteristics. Figures from the Nijmegen-based STEC Group show that the number of foreign-owned distribution operations is on the rise. According to the Holland International Distribution Council, more than half of all American and Asian European distribution centres are located in the Netherlands, giving it the largest market share of all EU countries.

Savills’ outlook for demand for logistics space in the Netherlands is positive. The country’s investment in improving the existing infrastructure will stave off competition from countries with lower labour and property costs. The Dutch ports rank no one in Europe in handling international flows of cargo. Together they handle about 392 million tonnes of cargo a year.

Jones Lang LaSalle sees a gentle spread of demand away from the core seaports and airports areas of the Netherlands. It says that, due to limited supply and related high land prices, companies are looking to settle in smaller towns such as Tiel, Roermond, Venray and Beringe. Similarly, logistic operators who used to focus their attention on the province of Noord-Brabant are now also increasingly considering Belgium or Germany.

Jones Lang LaSalle’s Belgium warehousing research reports occupier demand up. The beating heart of the market is Antwerp – and it’s a hard one to beat. Antwerp occupies a location in the centre of Belgium’s own little hot banana, which arcs north from Ghent to Liege.

Benelux’s success in attracting and keeping the world’s top logistics companies does not make it everyone’s darling. In terms of the region’s ability to compete as a logistics location with other European markets – its ports advantages aside – Knight Frank is not sanguine about its prospects. In its latest European industrial market strength forecast, Knight Frank puts Amsterdam in 17th place and Brussels in 19th place. Paris came top and Frankfurt bottom. Knight Frank ranked markets against 20 property, economic and demographic variables.

Part of the problem is rents, which Knight Frank says are due to rise in the next few years. Its research says that Amsterdam’s prime distribution space rents are at the bottom of the rental cycle and the only way is up. Brussels is just a few months ahead of Amsterdam

Jones Lang LaSalle takes a similar view. It says that warehousing rents across the Netherlands bottomed out in 2005. It put Belgium at about half way down. It says that prime rents for logistic schemes remain stable at 48 euros per sq m/year for premises located along the Brussels-Antwerp axis. That’s a significant drop from prime rents for semi-industrial units achieved in Brussels, especially Zaventem, which have reached 68 euros per sq m/year. However, its forecast for Luxembourg was that rents hit their peak and the only way now is down.

In the Netherlands, Savills says prime rental levels have remained relatively stable and touch 84 euros per sq m/year in the Schiphol area, though this dropped by 0.6 per cent year on year in the third quarter of 2005. Eindhoven and Rotterdam prime rents are both 60 euros per sq m/year and rising. Zwolle and Groningen peaked at 55 euros per sq m/year and rents are stationary or sinking.

It is, of course, airports that are driving prime rents – and now the air cargo market is taking off. Schiphol ranks fourth among European airports but that market is hotting up. Jones Lang LaSalle points out that relatively few developments have yet been realised around the secondary airports of the Netherlands: Rotterdam, Eindhoven and Maastricht . Meanwhile, TNT says its Express Division will lease two B747-400 freighters to start up a new direct service between Europe and China in 2006.

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