The Netherlands – Winter 2024
REPORT
Savills Research
Navigating Optimism and Challenges in Dutch Logistics
The Confidence Index focuses on three key themes:
By exploring these themes, we aim to provide a comprehensive overview that supports strategic decision-making for all stakeholders in the logistics and supply chain industry. Despite recent challenges, there are increasingly positive signs for the logistics occupier market. The European Central Bank's first rate decrease since raising it to a peak of 4% in September 2023 indicates a healthier European economy. Since May, industrial purchase orders have been rising, and consumer confidence has improved significantly, moving from -38 in May 2023 to -22 in May 2024. The critical question now is whether the confidence of occupiers has also increased, as this is a key indicator of future market dynamics in the logistics sector. In the Dutch business community, however, there are growing concerns about a deteriorating business climate. A notable example is the warning from ASML CEO Peter Wennink about a potential relocation due to the Dutch government's stricter stance on knowledge and study migrants. A negative perception of the Dutch business environment could pose significant risks to the logistics sector. Additionally, growth constraints such as shortages in labour, land, and power are becoming increasingly problematic for occupiers. Our research examines how logistics occupiers are responding to these challenges. We explore their future plans for location, strategies for addressing labor shortages, and their views on their societal roles amid these pressures.
Introduction
Savills, DILAS, and Analytiqa are delighted to present the second edition of the Logistics and Supply Chain Confidence Index for the Netherlands. This report provides valuable insights into the current confidence levels and future expectations within the logistics and supply chain sector. Conducted amidst a challenging macroeconomic climate in both the Netherlands and Europe, our research delves into the concerns and expectations of industry occupiers and examines the broader implications for occupier and investor markets. The Confidence Index serves as a crucial tool for occupiers, investors, and developers, offering a clearer understanding of the market's present and future challenges.
Dutch real estate transforms with global shifts. Demographics, digital disruption, and decarbonisation shape industry. Living, working, and markets evolve.
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Market Circumstances: a Brighter, More Positive View on Market Circumstances From Logistics Occupiers
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CONTENTS
Market in Minutes Q3 2023
Market in Minutes Q4 2023
Market in Minutes Q2 2023
Market in Minutes Q1 2023
Summer Special 2023
Logistics Confidence Index 2023
Market in Minutes Full Year 2023
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Logistics Confidence Index 2024
Summer 2024
Sentiment survey: A brief explanation
On behalf of Savills and DILAS, Analytiqa conducted a survey among logistics service providers (LSPs), manufacturers, and retailers. The survey included 50 Dutch logistics occupiers, evenly divided between third-party logistics providers (3PLs) and manufacturers/retailers, with 70% employing over 250 workers. This approach aligns with similar analyses conducted by Analytiqa in other countries. The index reflects the proportion of respondents reporting improvement, no change, or deterioration in the sector. An index reading above 50.0 indicates improvement or expected future growth, while a reading below 50.0 suggests a decline. The further the index is from 50.0, the stronger the change over the period.
Land Constraints
Market Circumstances
Business Climate
Market Conditions: Analysing current and anticipated market conditions. Business Climate: Evaluating the current business environment in the Netherlands. Growth Constraints: Identifying critical growth constraints in the logistics sector, primarily the shortage of available land and labour.
1. 2. 3.
This report addresses several key questions
By answering these questions, we aim to provide a detailed understanding of the current state and future outlook of the logistics and supply chain sector in the Netherlands.
How do occupiers view the current economic climate and its impact on their businesses? What are occupiers' perceptions of the current business environment in the Netherlands?
1. 2.
Overall, occupiers remain relatively confident, with 70% expecting an increase in turnover in the next 12 months. Additionally, 76% of logistics occupiers plan to make significant capital expenditures in the coming year, up from 60% last year.
The Logistics and Supply Chain Confidence Index for the Netherlands in 2024 is set at 58.8, indicating an improvement from last year's 57.4. Logistics operators are more optimistic this year, with a confidence level of 60.5 compared to 57.2 for manufacturers and retailers. This marks a reversal from last year when manufacturers and retailers were more confident.
Most occupiers have a moderate view of the Dutch business climate, with only 8% considering it unattractive. Similarly, only 16% rate the efforts of municipalities to create a more attractive business environment as insufficient.
A significant majority (93.8%) of companies already employ foreign labour resources, including knowledge and labour migrants. Moreover, 44% of companies plan to increase their headcount over the next 12 months, while 16% anticipate a decrease.
Key findings
Space constraints are a major concern, with 76% of respondents indicating that limited space affects their ability to expand and maintain economic activities in the Netherlands.
Investment in automation and robotics is a priority for many, with 82.6% of respondents planning to invest in these technologies for their logistics operations in the near future.
Regarding logistics policies, 74% of respondents are not in favour of logistics clusters and prefers spreading logistics activities over clustering them.
Labour Shortages
Market in Minutes Q1 2024
How do they view the use of land for logistics in light of growing land shortages? How are they adapting to critical growth constraints in the logistics sector, particularly labor and power shortages?
3. 4.
All content © copyright 2023 Savills. All rights reserved. Savills Nederland Holding B.V., established and registered in the Netherlands. Located: Claude Debussylaan 48, 1082MD Amsterdam. Chamber of Commerce (KvK) number: 33202244.
Business Climate: Logistics Occupiers Hold a Moderate View of the Current Dutch Business Climate
A Brighter, More Positive View on Market Circumstances From Logistics Occupiers
In the 2023 Logistics Confidence Index, 60% of logistics occupiers anticipated needing additional warehouse space, with none expecting to downsize.
However, market conditions in 2023 turned out to be more challenging than expected. The demand for logistics space significantly decreased due to a drop in orders for industrial products and lower consumer and producer confidence. Throughout 2023, quarterly logistics take-up consistently fell below the 10-year quarterly average, a trend that continued into Q1 2024. This data reflects a slowdown in demand for logistics space during this period, highlighting the ongoing challenges in the market.
Market circumstances
While economic indicators like the producer confidence index from Statistics Netherlands remain negative, they have been trending upward since December 2023. The responses in our research support this trend. Although 34% of occupiers find current business conditions more challenging than in the past 12 months and only 16% see them as somewhat more favorable, there is a significantly more positive outlook for the next 12 months among all occupiers. This optimism suggests that, despite ongoing challenges, occupiers are hopeful for improved business conditions in the near future.
A Positive outlook amidst challenges
A Brighter Outlook for Logistics Companies
Logistics companies, particularly large-scale third-party logistics providers, have a much more optimistic outlook compared to manufacturers and retailers.
This may be due to increased orders within Dutch industry and a sense that the worst of the downturn in orders and goods movement is behind them. Additionally, the recovering global movement of goods likely contributes to the higher confidence among logistics service providers, who are more focused on international trade. This positive outlook is evident in their profit expectations and willingness to make significant capital expenditures over the next 12 months. Half of the respondents expect an increase in profits, with no significant differences between logistics companies and manufacturers/retailers. Notably, there is a strong intention to increase capital expenditures, such as investing in warehouse space, and expanding the workforce. Furthermore, 82,6% plan to invest in automation or robotics within their logistics operations soon. There is a clear focus on using automation, AI, and data analytics to enhance efficiency and reduce costs. Key technologies for logistics service providers include automated guided vehicles and automated sorting systems, while manufacturers and retailers prioritise warehouse robotics. Overall, logistics occupiers appear eager to boost the movement of goods once again.
Land Constraints: a Major Concern Without a Push for Denser Land Use
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Occupiers are somewhat more critical of municipalities' efforts to create an attractive business environment, with 16% expressing dissatisfaction.
The primary focus areas identified by logistics companies to improve the business climate include personnel shortages (40%), sustainability and energy transition (36%), and taxation and premiums (34%). Personnel shortages are a particularly pressing issue. In last year’s confidence index, 49% of respondents already highlighted labour shortages as the main challenge for company performance. This concern is especially pronounced among logistics companies, with 52% prioritising investment in addressing personnel shortages as the key action for the Dutch government to improve the current business climate.
Throughout 2024, large-scale Dutch companies like ASML have raised concerns about the development of the Dutch business climate.
Logistics Occupiers Hold a Moderate View of the Current Dutch Business Climate
More Critical Views on Municipal Efforts to Improve the Business Environment
These concerns include fiscal interventions and critical political views on attracting labour migrants. Changes in fiscal policy and migration can significantly impact the logistics sector. Interestingly, occupiers have a relatively mild view of the Dutch business climate, with only 8% rating it as unattractive. Survey respondents did not cite shifts in regulations as a primary concern. Instead, they pointed to existing regulations and controls at micro-levels and the challenge of finding adequate space for further growth.
Labour Shortages: a Growing Concern
When it comes to addressing land shortages, occupiers don't hold strong opinions.
On the question of whether the sector should actively explore efficient land use and opportunities for densification, the average response was 2.66 on a scale of 1 (full agreement) to 5 (complete disagreement). Similarly, when asked if we should avoid unnecessary expansion of built environments to protect natural spaces and ecosystems, occupiers were somewhat dismissive, averaging a response of 3.06. Interestingly, manufacturers and retailers were even more dismissive, with an average response of 3.28. This suggests a critical attitude towards the idea of confining industrial activities within existing boundaries.
Land constraints
Addressing Land Shortages: Insights From Occupiers
+6.8%
Average rental prices for light industrial space increased from €82.66 per sq m per year to €88.25 per sq m per year (+6.8%).
Rethinking Spatial Constraints: Occupiers' Perspectives
A critical attitude towards spatial constraints becomes evident when discussing policies related to clustering.
The majority of occupiers (74%) disagree with land use policies promoting spatial clustering. Particularly, the notion that logistic clusters contribute to congestion and labor shortages is widely upheld (58%). Moreover, the statement suggesting that "The proliferation of distribution centers in the Netherlands has reached unsustainable levels, posing a threat to our valuable landscape" is also dismissed by most respondents. Overall, it seems that the idea of clustering logistics activities does not strongly resonate within the logistics sector. While there may not be a strong push for dense land use policies, occupiers are increasingly vocal about the need for more sustainable operations. This emphasis likely stems, in part, from the requirement to report on sustainable practices through mechanisms like the CSRD. However, sustainable energy solutions not only reduce environmental impact but also bolster long-term sustainability efforts. This focus on sustainability is recognised as a pivotal factor influencing logistics real estate location decisions, as highlighted by 58% of respondents. Consequently, many companies are actively implementing or planning measures such as installing renewable energy sources like solar panels, wind turbines or energy storage solutions to address these concerns.
A Major Concern Without a Push for Denser Land Use
Land scarcity is a frequent topic of conversation in the Netherlands, one of the most densely populated countries in the world.
With the population reaching 18 million in 2024, the allocation of limited land is increasingly debated. The competition for land among residential, recreational, natural, and industrial uses is intense. A vast majority of occupiers of logistics space (76%) acknowledge that spatial constraints at least slightly affect their business, with 54% indicating that these constraints limit their operations. Despite this, there is no strong push for denser land use within the logistics sector.
Savills Data, Intelligence & Strategy
Our independent Data, Intelligence & Strategy team solves all of your real estate issues. We work together with developers, investors, municipalities and occupiers and offer them high-quality, highly detailed customized analyses without losing sight of the strategic question.
Our advice is based on a solid combination of reliable data and in-depth market knowledge of the various market segments within the real estate market. In our analyses we focus on factors that influence the supply and demand of real estate. The product we deliver always depends on your wishes. We offer a wide variety; from a smart one-pager, an extensive research report to a tailor-made dashboard. Our product will support you in making well-founded property decisions.
Douglas van Oers
Director Logistics & Industrial +31 6 15684970 douglas.vanoers@savills.nl
CONTACT
Tim Beckmann
CEO Intospace Board member DILAS +31 622 91 69 58 tim.beckmann@intospace.eu
Analytiqa, Savills Data, Intelligence & Strategy, Statistics Netherlands, Nevi
Charlotte Harmsen
Head of Marketing & Business Intelligence +31 6 11403965 c.harmsen@savills.nl
Raymond Frederiks
Associate Marketing & Business Intelligence +31 6 11 40 39 65 raymond.frederiks@savills.nl
A Growing Concern
To sustain an operational workforce, occupiers are increasingly relying on foreign labour resources, particularly as they anticipate headcount growth in the coming years.
According to our research, a striking 93.8% of occupiers currently employ foreign labour resources. However, the issue of proper housing for these workers remains a significant challenge. Criticism of the housing situation for labour migrants is mounting, with many residing in substandard conditions, especially in larger cities. Municipalities often lack oversight of their living situations, leading to cases where labour migrants find themselves homeless when contracts expire or are terminated. For the majority of logistics companies (64%), the lack of adequate housing facilities has a tangible impact on their business operations. At the very least, it occasionally hampers their recruitment efforts and retention strategies. However, for 32%, this housing shortage poses clear operational challenges.
The demographic landscape in the Netherlands is undergoing a significant shift, marked by a decline in natural population growth due to decreasing birth rates and an aging population.
Labour shortages
Sources
Savills plc: Savills plc is a global real estate services provider listed on the London Stock Exchange. We have an international network of more than 600 offices and associates throughout the Americas, the UK, continental Europe, Asia Pacific, Africa and the Middle East, offering a broad range of specialist advisory, management and transactional services to clients all over the world. This report is for general informative purposes only. It may not be published, reproduced or quoted in part or in whole, nor may it be used as a basis for any contract, prospectus, agreement or other document without prior consent. While every effort has been made to ensure its accuracy, Savills accepts no liability whatsoever for any direct or consequential loss arising from its use. The content is strictly copyright and reproduction of the whole or part of it in any form is prohibited without written permission from Savills Research.
Given the increasing dependence on labour migrants due to demographic shifts, the impact of these housing challenges is expected to intensify in the years ahead. To address these issues and prevent further abuses, the new Dutch coalition government has outlined clear intentions regarding labour migrants. While the exact implementation remains uncertain, efforts are underway to develop an evaluation framework for new business establishments, taking into account factors such as required labour migrants, space, and energy considerations. Surprisingly, only 18% of respondents note that having proper housing solutions in the vicinity significantly influences their location choice to address workforce housing needs. Instead, factors like landscape, mixed-use opportunities, and economic value are given greater importance in determining location. However, this perspective is likely to shift in the future, especially as employers are increasingly held accountable for the living conditions of their employees, as outlined in the new coalition agreement. Consequently, the housing issue will become a more prominent consideration in location decisions made by logistics users.
Labour Migrants Housing Impact
Niek Poppelaars
Director Logistics & Industrial +31 6 27882408 niek.poppelaars@savills.nl
Demographic Disruption
Utrecht City Special
Amsterdam City Special
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demographic Disruption
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Many of the increases are associated with holdings that have been under-rented
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chapter Disruption
Puzzle
Conclusion
