UK proves the place to be for logistics firms

The first ever DTZ Occupier Perspective: European Occupancy Costs – Logistics 2010, reveals that UK occupiers will benefit from subdued growth in current occupancy costs until at least 2012, combined with relatively low labour costs when compared with other high-cost European markets.

The report, presenting a forecast (2010-2014) for logistics occupancy costs, reveals that Leeds ranks 10th in its list of 28 European cities at 77. This is compared to the European average at the end of September 2010 of 73 per sq m per annum. The higher costs in the UK are the result of high rents and high real estate taxes. In contrast, logistics companies benefit from lower costs in France, Belgium and Central Eastern Europe markets, predominantly because of lower rental rates.

London Heathrow has one of the highest occupancy costs in Europe at 182 per sq m per annum costs, closely followed by south-east England at 107 per sq m.

Simon Lloyd, DTZ head of industrial and logistics, said: "Our research highlights a disparity in logistics occupancy costs across Europe, with the UK presenting one of the highest cost locations."

He added: "However, occupiers across the UK are still able to benefit from a slow rate of growth in occupancy costs during the next three years – particularly subdued until 2012."

Mike Baugh, DTZ's industrial director in Leeds, added: "The Yorkshire region continues to offer both a cost-effective and strategic location for the distribution occupier looking to serve the UK and Europe markets.

"The region benefits from an excellent, uncongested road infrastructure with great links into the East coast ports.

"Labour supply is also competitively priced both in comparison with the rest of the UK and Europe. All these factors have assisted in attracting large-scale distribution occupiers to the region this year, including Debenhams, Amazon and fashion outlet ASOS."

Occupier activity in the logistics sector has improved in 2010 with some demand returning, particularly for modern flexible distribution space. The economic outlook for logistics is relatively positive, with growth in transport and communications expected to outperform GDP until 2014.