The report examines both mature and emerging logistics and industrial centres across Europe and ranks them based on two main criteria, which all play a determining role in site selection for manufacturing and distribution activities.
From a distribution perspective, cities in Belgium, the Netherlands and Germany dominate the report’s Top 10. These cities form part of the “Blue Banana”, a discontinuous corridor of cites strategically located at the economic heart of Europe.
Erik Barnekow, Director of EMEA Industrial and Logistics at Colliers International, said: “What is termed as the “Blue Banana” are the most densely populated and richest areas in the region, which makes them a logical choice for companies seeking to reach the largest number of customers as quickly and readily as possible. They also benefit from proximity to major European seaports and airports; the largest consumer markets; and a vast, and relatively skilled, workforce pool.”
“For instance, a population of 143 million can be reached by lorry within 9-hours from Antwerp. This increases to 190 million people for Frankfurt, the city with the largest population catchment in our analysis.”
Among these cities, the report reveals that Liege in Wallonia (Belgium) and Lille in Northern France offer a particularly good compromise between market access maximization and cost reduction. Northern Italy also offers good growth potential for distribution activities, especially given the expected increase in freight traffic through northern Adriatic ports, with Milan and Bologna both in the Top 20.
Outside Western Europe, Prague and Bratislava obtained the best score for distribution, bearing a lower cost of labour and property costs, with rents for prime distribution space in Bratislava 25% lower than the average for Western Europe and employee remuneration averaging just a third of the compensation payable in the Netherlands. The report expects CEE hubs to gain further importance across the European distribution landscape, as the centre of Europe gradually shifts to the east.
“Due to low labor costs and the availability of attractive, in terms of price, real estate Poland has enjoyed great popularity among manufacturing companies from Western Europe. The most attractive regions in terms of investment in both the production and distribution sector are the Upper and the Lower Silesia and the regions located in the western part of Poland. In our opinion, the interest from investors who want to locate their regional centers and factories in our country will continue to grow.” – comments Maciej Chmielewski, Partner at Colliers International, Director of Industrial and Logistics Agency in Poland.
The manufacturing scenario, where cost was held as the key determinant of location decision, is dominated by cities in CEE and neighbouring countries to the east, such as Ukraine.
From a manufacturing perspective, Kiev occupies the highest spot in this ranking, followed by Istanbul, Bratislava, Upper Silesia (Katowice) and Sofia. With an average remuneration per worker of ca. €3,500/annum in the transportation and warehousing sector, Kiev’s competitive advantage in our ranking rests, to a large extent, on the cost of labour.
Istanbul stands out for boasting relatively lower labour costs than most of the other cities, and good levels of infrastructure, which will see further improvements, as a series of on-going and planned projects in the region reach completion. More generally, Turkey, as Russia, are increasingly integrated in the global supply chain and will gain further importance as trade links with the Far and Middle East strengthen.
The report also marks the UK’s successful industrial transformation, most notably the East Midlands region which has gradually seen its production base shift away from coal-mining to car assembly. As well as Sunderland, which was once a shipbuilding centre in the north-east of England, has now become a car assembly platform, largely thanks to investment from Nissan.
Erik Barnekow, Director of EMEA Industrial & Logistics at Colliers International, continued: “The ongoing success of the Nissan plant in the north-east of England has seen it increase its share of global production and move up the value chain to produce vehicles at the premium end of the scale.”
Barnekow concludes: “Southern Europe is the only region with no clear competitive advantage in our analysis, be it in manufacturing or distribution. However, as highlighted by the report, this might change as some of these countries are seeing their cost ‘competitiveness’ improve, partly on the back of structural reforms currently being implemented.”