Investors are concentrating their capital on north Western Europe, and particular favour lies with the UK market which accounted for 40% of the total volume. Germany, Sweden, Finland, the Netherlands and Spain also reported strong quarterly figures.
Continuing the trend seen throughout the year, occupiers of industrial properties were predominantly third party logistics (3PLs) or retailers. In turn, these occupiers were driven by high levels of private consumption and exports from the Eurozone. Across Europe, the market is strengthening, with the Netherlands experiencing record-high H1 take up volumes, as well as a strong development pipeline. Germany, France and the UK all reported robust growth rates, on the back of a strong Q1. In contrast the automotive sector is experiencing high levels of interest in the Central and Eastern European markets.
Rental growth remained modest in the quarter, and was mainly concentrated in the UK and Ireland. From a yield perspective, markets that have traditionally seen higher yields such as France, Italy and Central Europe saw a contraction over the quarter. The weighted average yield for EMEA has now dropped below 7% and in many markets previous lows have been reached or overtaken.
“Growing occupier demand and strong investor activity has meant that a rising development pipeline will now progress across Europe. Specifically, a number of Czech, Polish and Dutch hubs saw the creation of a strong pipeline in H1. However, in the UK and Ireland the development potential in key locations appears to be insufficient to cope with demand, particularly when taking into account the specific needs of occupiers inclusive of size, configuration and location. As the sector continues to go from strength to strength, with strong drivers for demand which remain high; we expect to see investor appetite sustain the high levels seen in this quarter”, Amaury Gariel, Managing Director, EMEA Industrial & Logistics, added. (source: CBRE)
