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Parcel delivery centres : a growth opportunity

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Parcel delivery centres : a growth opportunity
There is growing recognition among occupiers and distributors of the general advantages of cross-dock facilities in modern supply chains, and of the emergence of parcel delivery centres (PDC) as a specific category. These buildings accommodate the transfer of goods from one carrier to another, with limited storage time, and can play a significant role in supply chains by eliminating or reducing inventory holding and handling costs. With consumer and corporate demands around delivery times and cost becoming ever more challenging, the benefits of such assets are increasingly recognised. The expected growth in online retailing in particular will underpin network reconfiguration and a substantial expansion in leasing demand close to major urban areas.

The market in Europe is currently relatively immature, and user demand is dominated by third party logistics (3PLs ) but we expect these trends to generate a growing contribution from parcel courier companies. Evidence from both Europe and the US indicates rental levels 40-50% above conventional warehouse rents. The relatively small scale of the sector and of individual assets, coupled with low site coverage, has so far constrained the emergence of a sizeable institutional investment market, but the anticipated growth in the user market will increasingly support this. Evidence from other more mature markets indicates that early-mover investors will benefit from a yield re-rating as sufficient liquidity emerges to allow portfolio funding and trading, and pricing for this type of asset converges with that for conventional warehouses.

Source : CBRE


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