By Nathan Kane, head of research
Published in Institutional Real Estate Europe
High flow through (HFT) real estate is one of the largest segments within the industrial and logistics real estate sector in Europe.
HFT properties facilitate the horizontal movement of goods, rather than the vertical long-term storage of goods found in most institutional-quality warehouse properties. HFT properties are designed and located to optimise a distribution network’s flexibility, speed of product movement and ease of small-order handling. Together, these factors reduce delivery time, improve equipment efficiency, and allow for better inventory management, in order to reduce a company’s underlying logistics cost structure.
Typically, large shipments arrive at an HFT facility, are transferred from one transportation mode to another, and are back on the road on the same day. There may be some repackaging as large loads from a single source are sorted into smaller loads for delivery to multiple destinations. There is often a need for ancillary land to park transportation equipment, such as truck trailers or maritime containers. A key attribute of HFT properties is their ability to accommodate a high and increasing velocity of shipments through a single facility.
Realterm estimates the size of the investable universe of HFT properties in Europe in 2022 was approximately €240 billion.
The methodology used to estimate the HFT real estate market size examines real estate use by carrier type, attributing the value of most space occupied by each carrier to the HFT property type in which it predominates. The total accounts for space occupied by a number of different type of occupiers: Less-than-truckload (LTL or groupage); courier, express, parcel (CEP) delivery; truckload/industrial outdoor storage; private fleet operations; and final-mile delivery. This total does not include the terminal real estate of rail or barge operators, which may provide for additional investment opportunities adjacent to typical HFT user types.
