According to Savills research, half a million square meters of warehouse and logistics space was completed in 2015, and the construction of large volume warehouses, as well as smaller warehouses and terminals for deliveries near big cities, are all currently underway. Savills has cited that another half a million square meters of industrial space is expected to be built during 2016 and 2017.

“As a result of the strong demand from tenants, this has led to a rise of speculative development of warehouse properties and Savills estimates that about 26 per cent of the construction of warehouses this year is purely speculative, where a building is built without a contract with any tenant,” says Peter Wiman, Head of Research at Savills in Sweden. “E-commerce in Sweden is growing by nearly 20 per cent per year and the end consumers’ demand for speed and flexibility in the final delivery is being heightened by the ‘Amazonification’ of the logistics industry. Today, the retailers are largely meeting consumer demands but in line with growing trends in ‘last mile delivery’, future requirements will lead to an increased need for smaller warehouses on the periphery of major cities in Sweden.”

In Stockholm, industrial areas have been converted into residential areas, which is creating a decrease in supply and higher rent costs. Land availability for the construction of new warehouses in the Stockholm area is also limited, which creates additional challenges.  In the report Savills points out, among other things, that there is an increasing demand for warehouses near the railway. Tenants are tending to build fully automated warehouses in order to increase the speed and flexibility to the end consumer.

“There has also been a clear trend amongst tenants for shorter lease durations,” comments Peter Wiman. “Due to the nature of the retail in the lengths of the rental periods are limited by the tenants’ difficulties in planning their capacity requirements as the pace of expansion in e-commerce is difficult to predict, and that they therefore do not want to commit themselves to long term contracts.”