One consequence of the growth in online retailing, and other of operations into fewer larger units: XXL-warehouses. This reflects network optimisation - notably economies of scale, inventory information management, closer links with the customer base strong drivers.

1. XXL WAREHOUSES
Europe real estate market
26th November 2013

2. 2
XXL WAREHOUSES IN SUPPLY CHAIN CONTEXT
Source: CBRE

3. 3
GENERIC XXL WAREHOUSE FEATURES
Size > 50,000 sq m

4. XXL WAREHOUSE
The retail case

5. 5
THE RETAIL CASE FOR XXL WAREHOUSES
1- The centralization and scale of procurement

6. 6
THE RETAIL CASE FOR XXL WAREHOUSES
2- Decrease of storage space inside shops

7. 7
THE RETAIL CASE FOR XXL WAREHOUSES
3- Evolution in inventory management
 Decrease of total inventory
o Increase of delivery services speed and efficiency
o Mutualisation of safety inventories of shop network

8. 8
THE RETAIL CASE FOR XXL WAREHOUSES
4- Optimising transport costs via the coordination of deliveries

9. 9
THE RETAIL CASE FOR XXL WAREHOUSES
5- Control of Information Flow
BIG DATA

10. XXL WAREHOUSES
The occupiers perspective

11. 11
THE OCCUPIERS PERSPECTIVE
Locational Criteria
0% 20% 40% 60% 80% 100%
Accessibility / quality of infrastructure
Labour availability
Proximity to customers
Government incentives / grants
Proximity to producers
XXL Warehouse Advantages
 Centralisation of operations (100%)
 Economies of scale (80%)
 Reduced transport (60%)
Source: CBRE
Percentage of respondents

12. 12
Challenges in developing sites
THE OCCUPIERS PERSPECTIVE
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Availability of large enough sites
Planning/permits issues
Limited supply of sufficiently
well-located sites
Finance/funding issues
Environmental issues
Source: CBRE
Percentage of respondents

13. 13
Europe’s Most Desirable Logistics Locations
LOCATIONS
Source: Prologis Research

14. MARKET
Figures and trends

15. 15
XXL WAREHOUSE TAKE UP IN EUROPE
2010 – H1 2013
1,36 1,20
2,61
1,30
2010 2011 2012 2013 H1
2012 and 2013 account for 14% of total year take up
Source: CBRE
Take-up in million sq m

16. 16
XXL WAREHOUSES TAKE UP BY COUNTRY
2010 – H1 2013
0,0%
10,0%
20,0%
30,0%
40,0%
50,0%
60,0%
70,0%
80,0%
90,0%
100,0%
2010 2011 2012 2013
Russia
Czech Republic
Poland
Netherlands
Italy
Germany
France
UK
Source: CBRE

17. 17
XXL WAREHOUSE TAKE UP BY SECTOR
2010 – H1 2013
Food retail
20%
Non-food retail
30%
Online retail
17%
3PL
22%
Manufacturing
8%
Other
3%
Including 3PL’s working for contracted customers, overall
retail demand could be in excess of 80%
Source: CBRE

18. XXL WAREHOUSE
Capital market trends

19. 19
Rationality of investment
INVESTMENT CONSIDERATIONS
 Strategic asset to serve efficiently more demanding consumers
o Both demand and stock are growing
o Scale and longevity of occupier commitment (10 to 15 years) due to
tenant specific fit-outs costs
 High average lot size and cost (ca. €35 m for a 50,000 sqm facility)
 Degree of specialism, liquidity, re-letting risks potential are negative
 Relationship between size and cost/value is not linear

20. 20
XXL WAREHOUSES INVESTMENT DISTRIBUTION
Trading activity: 2012 - H1 2013
UK
28%
France
6%
Germany
19%
Netherlands
2%
Spain
7%
CEE
12%
Sweden
20%
Turkey
6%
Source: RCA
€3 billion
19% of the overall
industrial market
Average
transaction size:
€52 million

21. 21
INVESTMENT CONSIDERATIONS
 Increase of money allocation 2013 vs 2012
 60% additional traded volumes: yields are compressing
 Evidence from Asia-Pac and USA indicates strong demand and pricing
 Advantageous for investors
o sub 7% in core Western Europe
o and low 7%’s in core CEE
 Additional capital entering the sector through funding of build-to-suits

22. 22
Conclusion

23. 23
“ A vital advantage of XXL-warehouses is that they allow
the ability to operate multiple client contracts from a
single location.
This does impose additional demands in terms of
locational criteria, financial resources and strategic asset
planning, but it also brings great value and flexibility
benefits to clients.
For instance it allows shared use of trucks and
better management of volume fluctuations.”
Jean Poujol, CFO
FM Holdings

24. 24
“ Given the size of site involved and the degree of
specialism required by many occupiers, deliverability is
critical and includes quality of motorway access and
likelihood of securing planning permission.
The ability to manage the whole development process,
and hence develop quickly enough on a build-to-suit
basis, is a key requirement in satisfying occupier needs.”
Nigel Godfrey, Senior Vice President
Gazeley

25. 25
“ We see a structural shift towards XXL-warehouses, and
they form a key element of our investment strategy.
Currently we would require a yield premium over smaller
warehouse assets to reflect additional risks relating to
liquidity and re-letting, although it is possible that these
will diminish as the sector matures”
Remy Vertupier, Fund Manager
LOGISTIS, AEW Europe

26. 26
2012-2013
EUROPEAN XXL WAREHOUSE LEASING
TRANSACTIONS
Date Location Size (sq m) Occupier Sector
Jun-13 Heudebouville, France 53,000 Intermarché Food retail
Sep-12 Stryków, Poland 56,000 Leroy Merlin Non-food retail
Jun-12 Monticelli, Italy 57,000 Gruppo Scerni 3PL
Aug-13 Derby, UK 58,715 Kuehne & Nagel 3PL
Feb-13 Milton Keynes, UK 62,710 John Lewis Non-food retail
Apr-13 St Joost, Netherlands 77,000 Action Non-food retail
Jan-13 Karlsruhe, Germany 85,340 Daimler Manufacturing
Feb-12 Reading, UK 86,558 Tesco Food retail
Oct-12 Daventry, UK 92,903 Sainsbury plc Food retail
Jun-13 Saint-Martin-de-Crau, France 117,000 Castorama Non-food retail

27. T +33 1 53 64 36 85
M +33 6 08 18 39 58
amaury.gariel@cbre.com
For more information regarding this presentation please contact:
Amaury Gariel, SIOR
Managing Director
CBRE l EMEA Industrial & Logistics