E-Commerce Growth Drives Logistics Demand in Dublin - Construction Network Ireland - Construction Network Ireland

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Published in Commercial Property on 08/02/2018

E-Commerce Growth Drives Logistics Demand in Dublin

#CBRE

CNI reports

CBRE today released their latest ViewPoint report on the growing impact of e-commerce on the logistics market in Dublin. In global industrial markets around the world, the growth in e-commerce has led to the ongoing integration of logistics and retailing. As a result, there is rising demand for logistics accommodation, especially near population centres. With the sector now showing very limited availability of large-scale modern warehouse accommodation, rental growth has firmed and spread further across European markets. Dublin is no exception and on trend with robust occupier demand and rising rents.

According to CBRE Global Industrial & Logistics Research, the ‘Last Mile’ within the industrial supply chain has come into play as logistics operators target sites within proximity to urban areas. This is known as ‘City Logistics’. CBRE Ireland analyses the demand drivers for logistics accommodation within the context of Dublin and provide some examples of viable solutions to the ‘City Logistics’ challenge.

Retailers and distributors are under increasing pressure to deliver consumer products and perishables into major global cities, often within narrow timeframes. As a result, adequate delivery sites in and around urban population centres are needed to accommodate changing consumer demand patterns, according to a white paper from CBRE Global Industrial & Logistics Research: Last Mile/City Logistics. This is also the case in Dublin, a city of over 1.3 million inhabitants and the primary logistics and supply chain hub for Ireland.

According to Garrett McClean, Executive Director in the Industrial & Logistics Agency department of CBRE, “Before e-commerce, supply chain design was often less efficient and more cumbersome. An effective retail supply chain could be designed as a thin network of one or two distribution centres on the outskirts of the M50. This traditional supply chain model was effective when the primary form of retail shopping took place in brick-and-mortar stores that replenished inventory on a longer schedule. When e-commerce was in its infancy there was no special expectation for next day delivery times, however, in recent years consumer expectations have changed, and supply chains have been forced to adapt accordingly”.

Mr. McClean notes that “Dublin is experiencing growing demand from e-commerce operators, including parcel delivery specialists and 3PLs. Some of these entities have requirements in excess of 18,580 sq. m. (200,000 sq. ft.)”.

It is not surprising that Dublin is seeing e-commerce growth, given its quality telecommunications infrastructure as well as growth of mobile devices, the latter of which is driven by tech-savvy millennials. Large investments in recent years in Ireland have resulted in state-of-the-art optical networks with world class national and international connectivity in Dublin and other cities, thus facilitating online activity, benefiting companies and consumers alike. Broadband speed in more rural locations are not yet comparable and need investment.

What’s more, the demographic and infrastructural drivers, along with rising industrial and logistics prime rents (+5.9% Y-o-Y) have led to increased industrial development, as demand for accommodation from e-commerce operators is anticipated to grow. Matthew Walaszek, Senior Research Analyst at CBRE Ireland contends that, “Young urban populations are driving global consumption; in Dublin—where individuals aged 25-39 make up 26% of the city’s population—this is a major driver for the growth of ‘last mile’ logistics”.

As online sales continue to grow and retailers develop their omni-channel and distribution platforms, it is expected that there will be more of a focus on ‘last mile’ delivery in the Dublin industrial and logistics sector going forward.

Read the full report HERE