Despite Amazon Retreat, Crossbay Targets $2B Last-Mile Portfolio
Amazon may have decided it has too much urban logistics floorspace, but investors are gambling that Europe needs a lot more last-mile space.
On Tuesday MARK, the $10B pan-European real estate investment manager, secured an initial €250M debt facility from global investment bank Citi to fund the first wave of acquisitions for the second fund of its urban logistics platform Crossbay.
Crossbay II is targeting a $2B gross asset value portfolio as it expands from France, Germany, Spain, Italy and the Benelux region into the UK, Sweden and Denmark through its new vehicle.
Analysts see the logic of the Crossbay move. With online sales expected to grow by 48% on the European mainland, the continent needs another 37.5M SF of last-mile warehouse floorspace in the years to 2026.
That is the estimate from Knight Frank, which said online sales penetration is likely to grow from 15.6% to 19.3% in the next five years in the key markets of France, Germany, Italy, Spain and the Netherlands.
A heat map of European logistics hotspots suggests most are still in the UK, but online sales are rising faster on the mainland.
The requirement for additional last-mile space is largest in Germany, where an estimated 14.7M SF is required. Three German cities — Berlin, Munich and Hamburg — feature in the top five mainland demand hotspots.
Germany is followed by France with an estimated 6.8M SF extra requirement, and Poland with 5.8M SF.
Based on an analysis of e-commerce operators in the UK and across mainland Europe, Knight Frank found that between 20% and 25% of total warehouse space is currently allocated to last-mile ‘spoke’ facilities.
“Some European markets remain some way behind more mature e-commerce markets such as the UK, therefore offering the potential for further expansion," Knight Frank co-Head of European Capital Markets Richard Laird said. "Robust tenant demand and limited supply are driving up values and encouraging investors to expand their urban logistics platforms."
“The urban logistics sector’s strong underlying fundamentals combined with the price dislocation we are seeing presents a unique buying opportunity, while ultra-low vacancy rates provide clear room for rental growth,” MARK chief executive Marcus Meijer said.
Amazon announced in May 2022 that it planned to shed 5% of the floor1space it added over the last two years, a total of 10M SF. The disposals have largely been in the U.S. Of the 15 facilities now out of use, 14 were last-mile facilities.