European logistics industry continuing to invest in property

The logistics industry is continuing its commitment to property investment, with the penultimate quarter of 2012 enjoying steady activity.

While year-to-date take-up levels have softened compared to 2011, quarter three transacted 3.0 million square metres. This is in line with the previous quarter, but is down 15% year-on-year.

Activity levels have remained resilient amid toughening negotiations and low economic growth.

Across the sector, full-year 2012 take-up volumes are predicted to remain below 13 million square metres, which is down 15% year-on-year.

However, completion volumes have edged up in the penultimate quarter and most markets recorded stable rents.

Germany is currently the most active, leading volume terms and registering just a four per cent decline year-on-year.

Demand was stable in the three months to September for assets over 5,000 square metres.

Unfortunately, this has been set against a back drop of downwards pressure on overall rents and uneven activity across Europe.

The Jones Lang LaSalle pan-European prime rental index fell one per cent year-on-year and over the first nine months of 2012, activity was down 15 per cent on the same period in 2011.

"Prolonged uncertainty about global economic growth and the eurozone crisis has led to a general slowdown in take-up levels. Slowing activity is driven by limited modern supply and tightening occupier conditions for build-to-suit schemes. With cost and risk management remaining on top of the occupier and landlord agendas, negotiations are starting to become tougher," Paul Betts, head of logistics and industrial EMEA at Jones Lang La Salle, explained.

Nevertheless, as occupiers re-align their existing supply chains to adapt to changing industry environments , brought about by the ascension of internet retailing, demand is stable, which bodes well for those considering property investment.

 "We currently see consolidation in take-up taking place on a high level," Mr Betts stated. The UK has enjoyed much of this activity, posting a 68 per cent increase. However, Britain did not experience increased year-on-year take-up.

Comments

Be the first to comment on this article!