Didier Malherbe

Distributors are chasing after sites to build logistics hubs

Didier Malherbe is Executive Director of industrial and logistics properties for CBRE France. He answered our questions about trends in logistics operations among distributors, their strategies and foreseeable impact on local territories.

How do you see logistics operations evolving among major distribution companies?

With the growth of e-commerce and competition from pure players, logistics has taken on a clearly strategic dimension: first of all, it can leverage gains in productivity; secondly, the ability to deliver goods in the shortest time has become a key criterion in the buying decisions of consumers. These days, supply chain managers come from top schools and have a seat on the management board of large corporations. They are asked to rethink the entire logistics organisation so that consumers receive their order fast: the same day or at a specified time.

What strategies are they adopting?

Everything is changing very quickly, almost week by week, but we can detect two main types of strategy. Specialist retailers tend to add warehouses to their existing organisation to handle online sales, whereas broad-range distributors prefer to set up multipurpose warehouses so that they can serve their brick & mortar stores and online customers. In both cases, the proximity of consumer catchment basins is a determining factor. Specialists opt for sites close to transport hubs, since they subcontract the delivery service to cover the critical last mile. Meanwhile, the generalists seek high-capacity sites to build warehouses supplying various formats of shops (e.g. hypermarkets/supermarkets/convenience).

What impact does this have on logistics facilities?

In 2017, with the French market for logistics premises dominated by mass market distributors, CBRE registered the leasing take-up of 4 million square metres of warehouses, including 2.6 million sq. m of new premises built to meet the growing demand for large buildings of over 30,000 sq. m. We are also seeing a rise in XXL projects, with over 100,000 sq. m, which was unheard of just a few years ago. Over half of these developments are built by the future occupants because they want control over their means of production. This is also an opportunity to catch up with other European countries in terms of logistics automation.

How do local territories deal with such demand?

Deliveries in the city-centre are the logistics challenge of the future. To meet this need, distributors will be constantly looking for sites that can accommodate their business. One solution is vertical integration, as is already done in Asia.

The recent example of the warehouse Ikea is leasing from Vailog at the Port of Gennevilliers, or that of Amazon in Brétigny-Sur-Orge, in the Paris region, point to a trend that we expect to see intensify. It’s an important undertaking in terms of environmental responsibility because it will facilitate the use of clean modes of transport for deliveries.