Inadequate road infrastructure between Western and Central Europe and increasing relocation of manufacturing plants to the East will encourage companies to build more warehouses in Central and Eastern Europe, according to a report released by distribution center developer ProLogis. The report, Impact of EU Expansion on Europe's Warehouse Markets, studies the effect that the recent addition of 10 countries to the European Union will have on logistics throughout Europe.

Authors Leonard Sahling and Lisa Graham found that the expansion has already influenced many Western European companies to relocate manufacturing plants to the new European Union member nations.

Indeed, the reports notes that there's already strong growth in warehouse construction in such cities as Warsaw, Prague, and Budapest, which have emerged as centers of automotive and pharmaceutical production.

However, an emerging warehousing market in Central and Eastern Europe doesn't mean all cities in those regions will become logistics hubs, the authors write. For instance, EU expansion strips Vienna of its traditional role as a gateway to the formerly socialist Eastern European nations. In fact, companies are avoiding building warehouses in Austria because of its high costs and tight traffic restrictions.

The authors assert that the logistics benefits of the EU expansion won't be felt for another five to 10 years. Until then, shippers must continue weighing both Western and Eastern European options to find the best locations for serving customers in Europe.