Logistics rental values increased by 3.5% between Q3 2019 and Q3 2018
The European real estate logistics market has remained healthy and robust so far in 2019, still supported by a buoyant e-commerce market. The volume of transactions in a panel of 21 European cities decreased by 18%. Indeed, it is not suprising that after 3 years of outstanding volumes of transactions we witness a slowdown in the logistics market across Europe. Due to the scarcity of supply, a shift outside the main markets is noticeable. Yet again, the Netherlands, Germany and Spain have recorded a strong activity. In the UK, the market has been quite resilient given the uncertainties surrounding the Brexit.
Rents are on the rise. Over the past 2 years, rents have been increasing significantly +4.2% in 2018 and +3.5% in 2019 so far. The main contributing factor is the insufficient supply of prime products in the best locations despite new developments. Another factor includes the difficulty to find adequate labour force in some territories, which reflects on the choice of location.
The average rent-free period accounted for 7.3% of headline rents in Q3 2019, ranging between 3% and 20% in Europe. Rent-free periods have been overall stable over the past 3 years adjusting down in some markets along with longer lease terms.
Prime net effective rents rose by 4.5% over the past 12 months, as a result of supply constraints. Even though new developments are underway, vacancy rates remain around 5% in most markets, ruling out any major risk of oversupply.