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Property Report - European Logistics Market - August 2021

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Logistics hits new records in investment and leasing markets

Take-up

The occupier market is thriving, with a number of regions posting record-breaking levels of take-up.  Yet construction rates for sheds are lagging demand, with limited speculative development.  Access to land is a limiting factor.  Tight demand and supply balance means rental pressures are building.

  • Take-up increased by 30% during H1 2021 in the 6 leading countries boosted by a strong economic upturn.
  • Supply is low with vacancy rates down again to 5.0% or less in most European countries. 
  • Rents rose by 1.7% in the last 6 months and are likely to continue to grow, stimulated by inflation, particularly in sectors where the imbalance in demand vs supply is strong.

 

Investment

Industrial and logistics investment reached another record but ongoing demand will be satisfied only to a limited extent. The development pipeline cannot supply enough product to meet excess demand and this will inevitably lead to further yield compression.

  • With over €25 bn invested during H1 2021 in industrial and logistics, the market set a new record and a strong growth of 62% compared to last year.
  • Prime yields compressed by 25% on average in Europe during H1 2021. In the Netherlands, the prime yield dropped to 3% whilst it stabilized in Germany to 3.35% and 3.5% in the UK.
  • Further yield compression for prime assets is likely over the rest of 2021 reflecting limited stock and strong demand. 

 

 

Property Report - European Logistics Market - August 2021
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