Despite inflationary pressures and economic headwinds, occupier market fundamentals remain strong, with positive rental growth expectations underpinned by a continued demand-supply imbalance. 01 June 2023, Industrial and Logistics The UK and Romania were the only markets to remain stable. n this context, prime rents continued to increase, +12.2% (y-o-y) in H1 2022 based on 21 countries including 48 markets. Though these cookies cannot be switched off, you can set your browser to block or alert you about these cookies, but please be aware that this will stop some parts of the Savills website from functioning as intended. There is an acute shortage of new units supporting strong rental growth in the UK. Although the yields are softening across Europe, they remain well below those recorded pre-pandemic; 5.57% (Q3 2018) and 5.04% (Q3 2019). Rising inventory levels further reinforce the data we have seen from occupier surveys pointing towards a move away from the inventory light just-in-time model and towards a just-in-case model, which will require occupiers to maintain or increase their warehousing footprints. Show sources information European logistics investment reached a record 22.5bn during H1 2021, a 60% increase on the H1 five-year average. knightfrank.com About Research Library Blog Contact Us Careers My Knight Frank Global Global Commercial Research, Head of EMEA Industrial and Logistics Road transport accounts for over 70% of the total transport greenhouse gas emissions, and 70bn of EU funding is available through the European Structural and Investment Fund, including 39bn to support the move towards low emission mobility. May 12, 2022. T-Mobile US said it isn't in talks to include its wireless plans in Amazon.com's Prime service after a Bloomberg report said Amazon is holding talks . Retailers and e-commerce operators continue to drive the market, accounting for 30% of demand in the Czech Republic, for example. Take-up in the 6 leading countries rose by 13% to 14.9 million sqm. In response to the Covid-19 pandemic, Savills Office FiT provides clients with practical, strategic and design-led advice and insights from our global experts. Prime European logistics facilities will remain in high demand throughout 2020 as ecommerce growth accelerates, Europe is set for another record year of logistics take-up, as vacancy rates continue to fall across core markets. Belgium, Czech Republic, Denmark, France and . Another trend that drove more intensive use of warehouse space during the pandemic was an acceleration of the shift towards online retail. However, the decline in Dublin was 41 per cent. Vacancy rates in major European cities have fallen by an average of 80 bps since the start of the year and remain at record-breaking lows. This heady mix of ever-increasing occupier demand and low levels of supply leads us to conclude that many rental growth forecasts are underestimating the localised market conditions which ultimately drive rental growth. Sweden hardened by 65 bps, Finland and Italy by 40 bps and 35 bps, respectively. Watch the webcast from the annual results presentation held on 16 March 2022. ", Cushman & Wakefield, Prime yields of industrial and logistics real estate in Europe as of 1st quarter 2022, by country or region Statista, https://www.statista.com/statistics/858167/prime-industrial-yields-by-european-country/ (last visited June 06, 2023), Prime yields of industrial and logistics real estate in Europe as of 1st quarter 2022, by country or region [Graph], Cushman & Wakefield, May 12, 2022. Consumer confidence has recovered positively following the pandemic. Investment flows into industrial assets continue to reflect the strong performance in the occupational market in recent years. While negative economic sentiment has risen significantly as the year progressed, it is worth considering the overall economic outlook as it stands. The best of the best: the portal for top lists & rankings: Strategy and business building for the data-driven economy: Industry-specific and extensively researched technical data (partially from exclusive partnerships). It has since risen further and now stands at 3.22% (end of February 2023) as compared with the 10 year German Bund of 2.64%, which will put further upward pressure on real estate yields. One infrastructure challenge comes from the provision of charging points across Europe. Due to further environmental concerns, some nuclear power stations are being shut down and operations are moving to cheaper CEE locations. As a result, prime logistics returns for the 2021-25 period are forecast at 8.5% pa in our base case. France (+117%) and Spain (+76%) also experienced strong growth, while momentum slowed in the Czech Republic and Hungary with no transactions in Q3, while declines were recorded in Romania (-69%), Netherlands (-66%), and the UK (-46%). Cushman & Wakefield. Through many monarchs and several economic cycles, we've become the international adviser of choice across every aspect of property. These are some of the findings GARBE Research presented in GARBE PYRAMID 2022, the latest update of the company's yield and rent map for the 122 most important . At Savills, our most valuable resource is our people. After several years of accommodative monetary policy with deposit rates close to or below zero, central banks have reacted to sharp inflation by swiftly tightening their monetary policy. Demand is robust, driven by e-commerce. Shares in Adnoc L&S opened at 2.91 dirhams on Thursday, up from the offering price of 2.01 dirhams, which was the top of a marketed range. Across Europe, prime rents grew by 10.7% between Q3 2021 and Q3 2022. Overall, the euro area is forecast to see 4.6% growth in 2021, up from -6.7% in 2020. Overview and forecasts on trending topics, Industry and market insights and forecasts, Key figures and rankings about companies and products, Consumer and brand insights and preferences in various industries, Detailed information about political and social topics, All key figures about countries and regions, Market forecast and expert KPIs for 1000+ markets in 190+ countries & territories, Insights on consumer attitudes and behavior worldwide, Business information on 70m+ public and private companies, Detailed information for 35,000+ online stores and marketplaces. Ho Jayega! Frankfurt am Main, 5 June 2023. This statistic is not included in your account. We've grown a lot in 160 years. In Poland, following a record volume last year, activity slowed down in H1 2022. The average vacancy rate in Europe has fallen by 80 bps in the last 12 months and now stands at 4.6%, which is structurally low by historical standards. Examples of this include: setting your privacy preferences, logging in to your Savills account, or filling in forms. Some 36% of consumer transactions were settled using physical money last year, according to a Swiss . Currently, we would like to give you an overview of Q3 2022 and the expectations for the logistics markets in Europe - as always in a comparative overview, with a total of 115 regions. This in turn is exerting further rental growth, comments. More than two thirds of markets saw yield compression over the past 12 months, with France (-63bps) outperforming all other regions. Poland and Germany achieved a record volume of transactions at mid-year, however other markets including France, the Netherlands and the UK, started to show signs of slowdown in Q2. Across the EU, the number of electric light commercial vehicles has increased by 250% over the past five years, according to the European Alternative Fuels Observatory (EAFO) and is now the fastest-growing alternative fuel type for light commercial vehicles. Savills plc is focused on climate-related risks and working together with its clients, suppliers and the local communities to deliver a more sustainable future. "Prime Yields of Industrial and Logistics Real Estate in Europe as of 1st Quarter 2022, by Country or Region. Vacancy rates for logistics space across Europe continue to creep downwards given the constrained land, particularly in western Europe. Overall, across the markets surveyed, an investment volume of almost 21 billion was achieved in Q3 2022, which - after the record figure in 2021 - represents the second-highest transaction volume ever measured. EUROPEAN LOGISTICS REAL ESTATE AS AN EFFECTIVE HEDGE AGAINST INFLATION The common wisdom is that as a real asset, property, and logistics property within it, ought to provide a good hedge against inflation, i.e., its income stream/value should keep up with the nominal rate of inflation. Visiting address: Riddargatan 7APostal address:P.O. ET. Savills analysis of new capital raised by funds indicates that 39% of the volume of new funds raised in 2021 has been allocated towards the logistics sector, more than any other sector. Extended lockdown periods have continued to support the growth of online retail across Europe. Supported by strong occupier fundamentals, yields are still compressing in most market. In contrast to retail, European prime logistics yields continue to decrease in most markets. The increase reflects the continued demand for best in class space in the top locations as demand outstrips a reducing supply of prime buildings in many markets. Yields continue to compress further into the 34% range across most core European markets due to the nature of record-low vacancy rates presenting solid fundamentals for rental growth and the falling risk premium against risk-free rates. Portugal, Spain and Finland hardened by 50 bps each, whilst Belgium, the Czech Republic, the Netherlands, France, Ireland, Italy and Sweden all moved in 25 bps. With debt-financed buyers priced out of the market, cash buyers may be able to pursue opportunities where they present themselves, but with yields rising in Q3, we would expect those who can adopt a wait-and-see approach in the short term. The problem for occupiers, however, is supply. As a result, we expect prime yields to compress by 30 bps by 2026 to reflect the resilience of the best assets. If inflation does persist, it will continue to erode household incomes which will in turn impact demand, particularly for larger purchases. Prime yields remained stable at 4.5% for standard assets but decompression is expected in the forthcoming months given the geopolitical risk in the region and the economic and financial context in Europe. You need at least a Starter Account to use this feature. More electric charging points will need to be installed in order to meet the EUs climate neutrality target by 2050 and ensure retailers can meet the rising demand for online delivery. In the Netherlands, the investment market in industrial and logistics maintained good momentum despite a scarcity of products available.
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