According to report author Elaine Rossall, associate director ofCushman's London office, over the past two years demand fordistribution space has remained buoyant across all markets. As aconsequence of improved economic growth, performance has beenpositive, with consistently high demand, particularly for largerfacilities used by retailers and logistics and 3PL firms. Thesesame users have led to an increasing focus on the highest qualityspace in locations with the greatest accessibility. Additionally,says the author, shorter lease terms have become an establishedfeature of the market. This is particularly true in Western Europewhere contract logistics is more established, but she calls thetrend increasingly pan-European.

But Rossall says the general economic slowdown is having animpact. Though she does not expect the requirement for top-qualityspace to diminish, clients looking to cut costs will be searchingout less expensive locations as long as infrastructure is suitablefor logistics operations. At the same time, she cautions, asustained reduction in consumption or drop in disposable incomewould inevitably have a negative impact on the distribution sector,leading to moreconsolidations and acquisitions. Rising oil costsare also likely to have an increasing impact, leading to greateruse of inland waterways and rail and more concern with findingcentral locations.

"As we enter a very different and more challenging economicenvironment, the emphasis will be focused even more on costefficiencies and defining the right location for largedistributionwarehouses," says Cushman partner Steven Watt, head ofthe firm's pan-European logistics and industrial practice. "Anumber of issues are being brought to bear which could challengethe established patterns of distribution hubs across theregion."