The total stock of SBU (Small Business Units) and Last Mile Logistics space in the CEE-15 countries accounts for over 3 million sqm, but the development of this market is not evenly spread in this region. The largest amount of space is located in Poland (circa about 2 million sqm), reveals a new report by Colliers: „ExCEEding Borders Small Business Units & Last Mile Logistics Sector in CEE-15”.
Kevin Turpin, Regional Director of Capital Markets, CEE at Colliers comments: “Occupier demand from the I&L sector in the CEE-15 region over the past few years has been strong and driven mainly by the 3PL, retail, in and distribution sectors, followed by the light production, automotive and FMCG industries. During the pandemic, we experienced higher tenants’ interest in the e-commerce sector and logistics operators offering their services to retailers and internet trading companies. The increase in inquiries for SBU/LML space is also a consequence of this trend”.
There are no typical SBU/LML schemes at all in Albania or Bosnia and Herzegovina. In that case, specific tenants in this sector lease smaller modules in big-box or smaller I&L schemes of lower standards. Some projects are also built with a concept similar to modern SBU/LML schemes, but for private use. The largest amount of space is located in Poland (ca. 2 million sqm). The country with the biggest share in SBU/LML space of its total I&L stock is Bulgaria, where this type of scheme accounts for 59% of the total supply.
In CEE-15 there are ca. 500,000 sqm of SBU/LML space under construction. The majority of that volume is currently being built in Poland. Typically, rents and service charges are significantly higher than in standard buildings, but SBU and LML spaces make up for this with excellent locations and excellent adaptation to needs. All of these factors result in higher construction costs. In most of the CEE-15 countries headline rental rates for this type of space stretch range from €4.0 up to €10.00 per sqm/month but, in the Czech Republic and Estonia, they can even reach levels of €12 per sqm/month.
The significant changes or disruption to consumer behaviour, the production of goods, and global supply chains, caused by the pandemic and the war in Ukraine, have all led to I&L becoming one of the most sought-after property classes, not only globally, but also across the CEE region. I&L investment transactions accounted for ca. 25% of all volumes on average in the CEE-6 countries over the past 5 years. Investment into the sector also secured the top spot in 2021 with 37% of volumes. European capital (including CEE) just about leads investment activity with 33%, ahead of Asia Pacific capital with 31%, since 2017.