EMEA Turnover Reaches Highest First Quarter Total since 2008 Peak
A total of €1.3 billion was invested in Industrial and Logistics (I&L) property in Germany in Q1 2014 representing the highest quarterly total for the country in six years, according to the latest research from global property advisor CBRE.

Over 60% of the capital invested in I&L in EMEA in Q1 2014 was channelled into the UK and Germany at €1.5bn and €1.3bn respectively, helping push the total turnover for the region to €4.34bn. This was up 5% compared with the same period in 2013 and the highest first quarter figure since 2008. Elsewhere there was notable activity in France, the Netherlands and also the Nordic countries highlighting a continued investor appetite for I&L assets that has been boosted by the uplift in economic sentiment evident throughout Europe since mid- 2013.

James Markby, Head of Industrial and Logistics investment, CBRE, commented:

“There is no shortage of equity or debt looking to catch the start of the up cycle for European logistics. We are also going to see material volume increases in Sweden, Central Europe, and The Netherlands. I&L markets are currently going through a structural repricing, but there is still a long way to run, given that European logistics is attractively priced compared to other sectors and regions. Fundamental drivers are making many locations look attractive, with vacancy rates below 5% and little new inventory stock coming through in the short term. It will be an important few years for those that can access the right deals.”

The EMEA Prime Yield Index fell a further 5 basis points in the quarter, with prime yields in the UK seeing the biggest quarterly decrease, but markets including Ireland and Spain also experiencing downward movements.

On the occupier side, prime rents remained broadly stable in Q1 2014, but take-up of I&L space continues to fluctuate by market mirroring the variable speeds of economic recovery across the region. Prague, Lyon and Regional Poland saw some of the most notable increases in demand for Warehouse space, while there was also further evidence of a gradual economic recovery in Southern Europe. Lisbon saw warehouse take-up increase 17% year-on-year and in Madrid and Barcelona, occupiers became more active in the market for larger units (above 25,000 sq m).

The lack of development in I&L around Europe persists as a result of which build-to-suit projects are favoured by occupiers and developers alike. Speculative schemes will begin to increase, but initially only in a limited number of stronger locations. The demand for specialised spaces such as XXL warehouses (>50,000 sq m) and parcel delivery centres is also continuing to rise.
Richard Holberton, Senior Director, EMEA Industrial and Logistics Research, commented:

“As investment turnover in Europe reached the highest first quarter total since 2008, it is clear that Industrial and Logistics property remains firmly on the agenda of international investors. The attraction to mature markets such as Germany and the UK continued in Q1 2014, but markets elsewhere in Western Europe, the Nordics and increasingly those of Southern Europe and Central and Eastern Europe look set for further investor activity due to improving economic sentiment, limited prime stock and high levels of investor competition in traditional markets.”

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