Friday 14th Dec 2018 - Logistics & Supply Chain

Centre Stage

Congestion congestion congestion. Benelux roads are almost all used up. There are some creative answers to this but will they solve the ever growing problem?

Almost completed and more than a year behind schedule, many in the logistics sector are pinning their hopes on the yet-to-open Betuwe Line, a dedicated railway for goods transport from Rotterdam Maasvlakte to the German border. It will treble the number of daily journeys on the East-West axis. Although its full capacity is not yet required, the Belgian Government reckons the number of trains using it is bound to increase rapidly due to overflow from the alternative ‘Brabant’ route.

Unfortunately, it comes at a cost. The infrastructure tax that is to be levied on the Betuwe line by both the Government and ProRail, responsible for infrastructure management, is in danger of making it uncompetitive.

Train taking the strain
Freight trains will continue to use the Brabant route even after the Betuwe line opens, albeit in lesser numbers. The Government expects a reduction of around 30 – 40 per cent of the current level.

Meanwhile, the European Environment Agency reports that freight transport by inland waterway rose from 118 billion tonnes/km in 1994 to 134 billion tonnes/km in 2004 across the EU. That’s where some developers, such as ProLogis’s Ko Nuijten, based in the Netherlands, are pinning their hopes. ‘It started ten years ago with a two-hour traffic jam in the mornings and evenings. Now the jams have connected. Rail still has a place but water is becoming more and more important,’ he says.

Nuijten says the place to build is on the axis of the north-south/Brussels-Amsterdam waterway and the east-west/Antwerp-Liege waterway. Liege is the second largest inland port in Europe, he points out.

‘So far, waterways have always been in addition to but not instead of roads,’ he explains. ‘But additional loads will have to go down the canals. Outbound distribution to the consumer will have to remain fast but inbound distribution can be slow with planning.’

Liege Trilogiport, developed by Liege Port Authority on the banks of the Albert Canal, offers nearly 250 acres for development. In addition, the SPI+ business park at Hauts-Sarts on the E313 Liege- Antwerp highway provides additional options. The park recently attracted contact lenses manufacturer CooperVision, which is investing more than six million euro to build a distribution centre that will open this year and employ about 100 employees.

At another waterside development, at Laakdaal, Nike is expanding its European distribution center with a new 35,000 sq m building on the Albert Canal. It is scheduled to open in July.

Trends in freight transport intensities per €1,000/GDP are fairly stable in Benelux. Belgium saw 238 tonnes/km per €1,000/GDP in 1992. By 2004, that figure had only risen to 243. Similarly, in the Netherlands, the figure rose from 331 to 341 across the same period. But any rise in GDP means a commensurate rise in road traffic, bringing the Benelux road network an ace closer to gridlock.

With one of the world’s top ports to serve it, the supply chain industry is mad for Benelux. In terms of the property market, however, nobody currently gets excited about Benelux unless they are paid to be excited about it.

Economic doldrums
The region has been in the economic doldrums for sometime and even in 2006 occupier demand has been  modest. Despite growing portside activity both Rotterdam and Antwerp have had lacklustre take up.

However, rents look like they are on the way up. Most excess supply has now been taken out of the market and occupier demand, particularly for large logistics space looks set to exceed availability.

Jan Diephuis of Diephuis Partners/King Sturge in Amsterdam reports that, after weak economic growth in 2005, 2006 saw GDP growth reach 2.9 per cent in the Netherlands with improving investment and strong exports. Consumer demand is forecast to rise during 2007. There has been an increase in development activity around the major hubs in the Netherlands, particularly around Amsterdam and Schiphol. AMB has been active increasing their offers at their Fokker Logistics Centres, part already leased by DHL at Fokker Logistics Centre 1.

Schiphol is a prime location for worldwide distribution of fast moving goods due to the combined offers of the port, airport and motorway connections. Pratt & Whitney Canada, the high tech engine parts manufacturer announced the opening of a new parts distribution centre in Amsterdam to provide rapid parts deliveries for its engine customers in Europe, the Middle East and Africa capitalising on Amsterdam’s provision for rapid delivery worldwide.

Prime rents around Schiphol stand at €90/sq m pa, some €40 above the regional average forwarehousing. Rents have been relatively stable but the slow increase in occupier demand has begun to put upward pressure on rents, eroding incentive levels around the most popular locations.

‘After an exceedingly strong investment market for industrials in 2005, 2006 saw a slow down driven by low availability of stock,’ says Diephus. ‘Despite relatively low levels of owner-occupation of industrial property compared to the rest of continental Europe, strong investor appetite for logistics property coming from both domestic and international investors has kept supply of investment product extremely low pushing yields down to around 6.5 per cent by Q4 2006.’

The port of Rotterdam saw growing levels of container freight throughput during 2006 and this has increased demand for warehousing space in Rotterdam Distriparks. However overall take-up for space in the Rotterdam area has been broadly stable against 2005 figures.

Rotterdam has fairly significant vacancy at around 15 per cent of stock. The majority of this is in older units, though modern units are still available to let. The planned extension to the Port of Rotterdam is expected to triple the current container handling capacity and is likely to boost demand for portside warehousing facilities in the medium term. ‘Another interesting trend in port side activity is the further development of Eurofrigos’ Rotterdam temperature controlled Halal compliant storage facilities,’ says Diephus. ‘The certification will mean that Eurofrigo Rotterdam can serve producers and traders for the Islamic market throughout the EU. The need for Halal storage is likely to grow across the EU with a  potential market of 30 million consumers in Western Europe.’

Rents around the Rotterdam area have been under a steady downward pressure over the last few years and there have been slight falls in headline rents. Currently rents for prime property stand at €60/sq m pa.

King Sturge’s Luc Kiebooms says that the Belgium market was active during 2006. Most activity was along the Antwerp-Brussels corridor running through Mechelen. ‘The Antwerp region has seen excellent levels of occupier demand during 2006 bringing take up to an over all 178,600sq m of large logistics space,’ he says.

Prologis let 35,300 sq m at ProLogis Park Willebroek, to European sports equipment retailer Decathlon. The park will function as a primary distribution centre for Decathlon, serving markets across Western Europe and the United Kingdom. NYK is moving its cross-dock activities out of a new 3,750 sq m facility in Sint Katelijne Waver, close to its former site in Mechelen and the new consolidation and distribution centre for DHL Exel Supply Chain in Willebroek. The 34,000 sq m ‘Mega Food Centre’ was built by Eurinpro and the planned second phase of 43,000 sq m will be fully operational by 2009. Mercure International of Monaco (MIM), an international distributor of sporting goods and equipment, also took 32,000 sq m space at Eurinpro’s Willebroek site.

Supply for larger logistics space is running at around five per cent across Belgium. In Antwerp Province both ProLogis Park Willebroek and the Eurinpro site has the potential for development.

Slough Estates have also been active in Antwerp Province with successful letting at Rumst Logistics Park and site acquisition at Kontich. Both locations are situated close to the E19 motorway between Antwerp and Brussels.

Also in Antwerp Province, Kuehne + Nagel has opened a new logistics centre with 45,000 sq m of warehouse space, extendable to 75,000 sq m, in Geel on the E313 motorway, which runs between Antwerp and Liege. Kuehne + Nagel Belgium’s contract logistics and overland departments, currently located at separate sites in Turnhout 20km to the north, will be brought together at the new location. ‘Across Belgium, after a slow down in the investment market during 2005 due to lack of investment product, 2006 has again been a record breaking year,’ says Kiebooms.

Overall take up
Overall take up in northern Brabant reached 30,000 sq m during 2006. ProLogis is still offering some 20,000 sq m in Vilvoorde to the north of Brussels and a further 7,000 sq m of logistics space available across the Brabant province. Despite rapidly increasing land prices in Flanders generally, driven by third party logistics operators seeking large sites for consolidated facilities, rents have remained relatively steady over the last few years and are expected to remain stable in 2007, says King Sturge’s Cedric van Zeeland.

2006 was notable for the interest of international investors in all sectors of industrial property, rather than just larger units as in previous years. As a well established industrial market, the Brabant region warehousing market has attracted strong investment interest. During 2006 acquisitions included Kenmore European Industrial Funds acquisition of 31,000sq m of warehousing in Aarschot to the northeast of Brussels with tenants including Tyco, Distri-Log and Black and Decker, the latter of which uses the property as a distribution hub for the Benelux region.

‘As is the case across Mainland Europe, due to scarcity of good logistics investment product and because of strong investor appetite, yield compression is very strong. Prime logistics yields are around 6.0 per cent currently,’ says King Sturge’s Stefan Kennes.

Tom Hus of King Sturge looks after Limburg, which has become a crossroads for some of Europe’s major transport routes: the A2, A67, A73 and A77 motorways as well as the busy railway lines which link the western Netherlands, western Germany’s Rhine-Ruhr industrial region and Central Europe all traverse Limburg. Inland shipping has access to the major European waterways via the Meuse and the Juliana Canal and there is Maastricht Aachen Airport, which serves the Euroregion by providing an essential node for normal passenger service, tourist charter flights and international freight transport.

Among local deals, a 15 ha land sale to Alro/Marmorith at Dilsen-Stokkem could provide logistics space by 2011. In Genk WDP has bought a 60,000 sq m site in the Hermes logistics park, next to the E314 and in the vicinity of Genk harbour. The park has a total of 500,000 sq m storage space. WDP will have a first phase of 10,000 sq m ready this year. Next to it, Mamchiels/Maasland can develop some 56,000 sq m of logistics at its site at Opglabbeek. And at the Van Pelt site at Lummen, a joint venture by Gijbels and Koramic, there is a total of some 45,000 sq m on offer.

Prime rents are somewhat high as WDP has offered their new logistic development at €34/sq m pa. The development of Gijbels/Koramic will most probablybe offered on the market at €36/sq m pa but will face tough competition from the WDP development.

It’s all about economic growth and like it or not, Benelux’s economy looks set to grow. Experian Business Strategies research says that imports to Belgium grew 4.3 per cent in the period 1996-2006. That figure is expected to grow to 5.3 per cent over the next 10 years. Luxembourg’s growth figure for the last 10 years was 8.9 per cent and will shrink to 6.5 per cent for the next for the next. And in the Netherlands, the 6.5 per cent figure for growth in imports over the last ten years will dip to 6.1 per cent over the next 10. If you are a driver, with roads becoming ever more snarled up, you won’t like it…snarled up, you won’t like it…

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