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The high cost of final mile logistics will increase rents for urban warehousing as demand is driven by a need to cut transport spend, according to research conducted by Cushman & Wakefield.

Its ‘Last Link’ report found that E-commerce final mile accounts for half (50.3%) of all logistics costs, with property accounting for just 4.3% of total logistics spend. It follows an analysis of last mile deliveries for e-commerce in London, Paris, Madrid and Milan.

Cushman & Wakefield attributed the disproportionate spend on final mile and final kms to inefficiencies such as lack of delivery guarantee, less-than efficient delivery routes and separate return trips. It said that reducing the drive time between the urban depot and delivery point invariably brought down total final mile and final km costs.

Lisa Graham, head of EMEA industrial research at Cushman & Wakefield, said: “Our findings prove why the logistics premium for urban land is worth it due to the enormous savings possible through total transportation costs.

“We expect rents for urban depots to increase significantly across major European cities as logistics hubs develop further.

“Strong rental growth potential for last link depots now puts logistics in the same revenue ballpark as traditional urban land uses.”

By Michelle Mooney