EUROPEAN LOGISTICS MARKET Q4 2018
RESEARCH January 2019
Take-up Take-up in 5 countries : + 10% and a high level of demand
Take-up: yet again a good momentum in 2018.
million m²
•
Strong activity in all the main markets supported by a good level of demand and buoyant e-commerce market.
•
Lack of new developments to meet new requirements: XXL, e-commerce.
•
Some speculative developments but not enough to offset the lack of new supply. This is still stimulating demand for design & build solutions.
8 7
6.7
6 5
4.0
4
3.7
3
3.1
2.8 1.6
2 1 0
15161718 15161718 15161718 15161718 15161718 15161718 Germany
France
UK
Poland Netherlands Spain
2
Logistics prime rents HELSINKI
OSLO
135
STOCKHOLM
82
EUROPE
Q4 2018
DUBLIN
106
DÜSSELDORF
48
170
LILLE
46
PARIS
VILNIUS
55 BRUSSELS
56
POZNAN
86
FRANKFURT
42
76
54
64
41
BRATISLAVA
82
MILAN
54
47
BUDAPEST
54
BUCHAREST
48
74
54
Stockholm
KATOWICE
+2% = +6% = +2%
Oslo
MADRID
VALENCE
Paris
WARSAW
MUNICH VIENNA
47
Venlo
PRAGUE
84
LYON
London
51
54
BERLIN
65
Munich MOSCOW
50
72
VENLO
LONDON
42
RIGA
HAMBURG
82
LISBON
58
87
79
BIRMINGHAM
50
TALLINN
COPENHAGEN MANCHESTER
Q4 2018 vs Q4 2017
ST PETERSBURG
120
=
Milan
+6%
Madrid
+6%
Warsaw
-3%
MARSEILLE
46 BARCELONA
82
ROME
55
≥ €90
€70-90
€50-70
< €50
ATHENS
48
Source : BNP Paribas Real Estate
3
Logistics prime rents Logistics prime rents increased in most countries during 2018 ₏/m²/year
Q4 2013
Q4 2018
Range 2007-2018
200 180
170
160 140 120 100 80 60 40
86
84
82
82
82 65
56
54
54
54
48
42
41
20
4
Industrial and logistics investment Industrial & logistics investment is by far above the 10-year average Industrial & Logistics
Industrial & logistics investment Average 2007-2018
€ billion 14
•
€36bn in 2018 (-12% compared to 2017)
•
Market slowdown but after an exceptional year 2017 that was boosted by large corporate deals.
•
Logistics is still an attractive asset in Europe due to: • GDP growth in Europe • New entrants • Yield compression • Strong relative pricing compared to other sectors
12 10 8 6 4 2 0 07
08
09
10
*Industrial premises and warehouses
11
12
13
14
15
16
17
18
5
Investment in Europe Logistics investment is still thriving following an exceptional year 2017 Commercial real estate € billion
Year
300
Industrial & Logistics
Average 08-18
250
•
The economic and financial environment remains favourable for logistics.
•
The logistics market represents 14% of total commercial real estate in 2018.
•
The strong increase in 2017 reflected the sale of large portfolios including Logicor for over €12bn.
•
2018 recorded the 2nd highest volume ever, well above the 10year average threshold.
200 150 100
262 139
50 0
07
08
81 09
121 131 128 10
11
12
171
13
213
265 236 269 264
14
15
16
17
18
Industrial & logistics investment € billion 50
Year
Average 08-18
40 40
30
36
20 10 0
24 07
13 08
7
10
12
10
09
10
11
12
*Industrial premises and warehouses
17 13
23
24
24
14
15
16
17
18
6
Industrial & logistics investment 0.5
1.8
Q4 2018 vs Q4 2017
1.9
EUROPE – 2018
€ 35.6 bn -12% vs 2017
0.5
0.1 9.3 4.5 0.3
7.2
1.9 0.5
3.1
0.1 0.6
0.3 0.1
0.1
1.3
UK
-24%
Germany
-22%
France
-31%
Netherlands
+62%
Sweden
+6%
Poland
+66%
Norway
+83%
Spain
+21%
Italy
-22%
1.0
≥ € 5 bn
€ 2-5 bn
€ 1-2 bn
< € 1 bn
Source : BNP Paribas Real Estate
7
Industrial & logistics investment After a historical year 2017, investment remains outstanding across Europe Industrial & Logistics investment in Europe: -12% (2018 vs 2017)
€bn 14 12 10
9.3
8
Strong activity in all the main countries after the exceptional year 2017 and sharp demand across Europe.
•
The market is still simulated by a favourable economic and financial context.
•
Spain, Sweden, Poland and the Netherlands achieved record volumes in 2018.
7.2
6
4.5
4
3.1
2 0
•
161718 UK
161718
161718
Germany N'lands
161718
1.9
1.9
161718
161718
France Sweden Poland
1.3
1.0
161718
161718
Spain
Italy
8
Logistics prime yields HELSINKI
OSLO
5
STOCKHOLM
5.25
EUROPE
Q4 2018
DUBLIN
5.1
7.75
DÜSSELDORF
4.5
LILLE
5.75
4.75
BRUSSELS
PARIS
4.75
4.05
FRANKFURT
4.05
5.75
WARSAW
5.4
6.25
KATOWICE
5.4
MUNICH
BRATISLAVA VIENNA
5.4
MILAN
4.75
POZNAN
PRAGUE
4.05
LYON
5.25
7
7.75
BUCHAREST
8.25
5.3
6.25
London
-25
bp
Munich
-45
bp
Venlo
-50
bp
Paris
-15
bp
Warsaw
-25
bp
Stockholm
-15
bp
Oslo
=
Milan
-50
bp
Madrid
-60
bp
BUDAPEST
MADRID
VALENCE
11
7.75
BERLIN
4.05
MOSCOW
VILNIUS
4.05
VENLO
4
6.25
RIGA
HAMBURG
4
LONDON
LISBON
7.75
5.75
4
BIRMINGHAM
11.2
TALLINN
COPENHAGEN MANCHESTER
Q4 2018 vs Q4 2017
ST PETERSBURG
5.5
MARSEILLE
4.75 BARCELONA
5.3
ROME
5.5
≤ 5%
5 – 6%
6 - 7%
>7%
ATHENS
9.5
Source : BNP Paribas Real Estate
9
Logistics net prime yields Net prime yields are at their lowest level in most countries Q4 2017
Q4 2018
Range since 2007
10% 9% 8% 7% 6% 5% 4% 3%
4.00% United kingdom
4.05%
Germany
4.50%
N'lands
4.75%
France
5.15%
Poland
5.25%
Sweden
5.25%
Italy
5.30%
Spain
5.50%
Finland
5.75%
Czech Rep.
10
Net prime yields : gap offices / warehouses There is still room for further yield compression in most countries Office
Logistics
10 yr Gvt bonds
7% 6% 5% 4% 3%
4.00%
4.05%
4.50%
2.70%
5.25%
5.25%
5.30%
5.75%
4.75%
4.75% 3.30%
3.50%
3.50%
2%
4.75%
5.15%
5.50%
3.30% 3.25%
3.00%
3.40%
1% 0%
UK
Germany N'lands
France
Poland
Sweden
Italy
Spain
Finland
Czech Rep
11
Logistics market - UK Take-up (warehouses over 5,000 sqm) Take-up
000 m²
Prime rent
4,000
€/sqm/yr 3,662
2,880
3,000
200 170 150
2,000
100
1,000 0
250
2011 2012 2013 2014 2015 2016 2017 2018
50
Investment
Prime yield 6%
15,000 12,000 9,000 6,000 3,000 0
12,337
5% 4.00%
9,328
2011 2012 2013 2014 2015 2016 2017 2018
Take-up
4% 3% 2% 1%
€/sqm/yr
Prime rent
1,500
250
1,200 900 600
150
82
300 0
200
170
15 16 17 18 Birmingham Midlands
Investment (industrial and logistics) € million
000 m²
79
15 16 17 18 London & South East
15 16 17 18 Manchester North West
91100
73
15 16 17 18
50 15 16 17 18
0
Leeds Bristol York.Humber North East
Take-up : +27% (2018 vs 2017) • The market has been thriving despite a political context. The depreciation of the Pound Sterling boosted British exports. This has contributed to maintain a strong dynamics in the logistics market. • Investor and developer confidence in the current market has remained consistently strong, with sustained increase in speculative developments. • The prime rent stood at £6.75 in Birmingham and increased to £6.5 in Manchester Investment : -24% (2018 vs 2017) • Industrial and distribution warehouse assets continue to attract UK institutions and overseas capitals. • Low availability of prime logistics assets has led to further upward pressure in pricing, with a prime yield standing a 4.0%
12
Logistics market - Germany Take-up (warehouses over 5,000 sqm) 000 sqm
Take-up
Prime rent
€/sqm/yr 86
9,000 7,500
90
Take-up
000 sqm
€/sqm/yr
Prime rent
86
600 76
90
84
72
75
500
60
400
4,500
45
300
45
3,000
30
200
30
1,500
15
100
15
6,691
6,000
0
5,521
2011 2012 2013 2014 2015 2016 2017 2018
0
0
54
15161718 Frankfurt
Investment (industrial and logistics) € million 10,000
Investment
Prime yield 7%
9,179
8,000
7,202 6%
6,000
5%
4,000
4.05% 4%
2,000
3%
0
2011 2012 2013 2014 2015 2016 2017 2018
2%
15161718 Hamburg
15161718
15161718
Berlin
Leipzig
65
15161718 Düsseldorf
61
15161718
15161718
Munich
Cologne
75 60
0
Take-up : +21% (2018 vs 2017) • Another record year in overall Germany, well above the average. • New supply for the rental market remained limited and users turned to build-to-suit solutions. • The prime rent in Berlin increased in Q4 to reach for the first time the highest value in Germany. Investment : -22% (2018 vs 2017) • Logistics assets continue to attract more capital than ever, reaching another good year so far. This is the second best volume recorded after the exceptional year 2017. • Following a strong compression in 2016 and 2017, yields continue to decrease further in 2018 to bottom at 4.05% in the major logistics hubs.
13
Logistics market - France Take-up (warehouses over 5,000 sqm) Take-up
000 sqm
Prime rent
5,000
4,675
€/sqm/yr 56 4,003
4,000
60 50
3,000
40
2,000
30
1,000
20
0
2011
2012
2013
2014
2015
2016
2017
2018
10
Take-up
000 sqm 2,000
€ million
Investment
corporate
Prime yield
5,000
8%
4,000
7%
3,000
6%
2,000
5% 4.75%
1,000 0
2,528
2,648
2011 2012 2013 2014 2015 2016 2017 2018
4% 3%
60
56 47
1,500
46
46
45
1,000
30
500
15
0
15 16 17 18 Greater Paris
Investment (industrial and logistics)
€/sqm/yr
Prime rent
15 16 17 18 Lyon
15 16 17 18 Lille
15 16 17 18
0
Marseille
Take-up: -14% (2018 vs 2017) • Following a strong growth rate 3 years in a row, the market is slowing down slightly reflecting fewer XXL deals. • Grade A supply stabilized with few developments underway but overall the French market continues to suffer from a scarcity of large vacant schemes. • Prime rents range from €53-56 in Greater Paris to €43-47 in the regions. Investment: -31% (2018 vs 2017) • The investment market reached exceptional levels in 2017. Unsurprisingly, industrial and logistics investment adjusted down in 2018. Yet, the volume recorded remained strong in 2018 boosted by portfolio transfers. • The prime yield further narrowed down to its lowest at 4.75%. Given the high demand for logistics and competitive pricing against other asset classes, it is expected to further decline to 4.5% in Q1 2019.
14
Logistics market - Netherlands Take-up (warehouses over 5,000 sqm) 000 sqm
Take-up
Prime rent
3,000
€/sqm/yr 2,827 90 80 75
600
60
400
1,500
45
300
1,000
30
500
15
2,500
2,219
2,000
0
0
2011 2012 2013 2014 2015 2016 2017 2018
Investment
Prime yield
5,000
4,530
6%
4,000 3,000 2,000
2,791
5% 4.50% 4% 3%
1,000 0
7%
2011 2012 2013 2014 2015 2016 2017 2018
2%
Prime rent
€/sqm/yr 90
500
68
65
75 60
54
48
45
200
30
100
15
0
15 16 17 18 Venlo-VenrayEindhoven
Investment (industrial and logistics) € million
Take-up
000 sqm
15 16 17 18 West-Brabant
15 16 17 18 Rotterdam
15 16 17 18
0
Amsterdam
Take-up : -35% (2018 vs 2017) • Business confidence is boosted by domestic demand and industrial output. GDP growth is expected to slow down to 2.0% in 2019. • All the major occupier markets have recorded strong volumes of transactions in 2018. Venlo and West-Brabant confirm their strong market positions. • Prime rents in Venlo remained competitive at €47.5 in 2018. Investment : +62% (2018 vs 2017) • Industrial and logistics investment recorded its highest level ever, representing 26% of total commercial real estate investment in 2018. • Yields have dropped significantly since the beginning of the year to 4.5% in Venlo, 4.7% in West-Brabant, 4,95 in Rotterdam and 5% in Amsterdam.
15
Logistics market - Spain Take-up (warehouses over 5,000 sqm) Take-up*
000 sqm
Prime rent
2,000
€/sqm/yr 1,623
100
000 sqm
Take-up
1,000
1,600
82 80
800
1,200
60
600
800
40
400
20
0
2011 2012 2013 2014 2015 2016 2017 2018
0
€ million 1,400
Investment
Prime yield
1,200
1,281 9% 8%
1,000
7%
800 600
6% 5.30% 5%
400
4%
200
3%
0
2011 2012 2013 2014 2015 2016 2017 2018
2%
100
82
80
74 54
60
400
40
200
20
0
15 16 17 18 Madrid
Investment (industrial and logistics)
€/sqm/yr
Prime rent
15 16 17 18 Barcelona
15 16 17 18
0
Valencia
Take-up: +21% (2018 vs 2017) • The market is yet again particularly dynamic boosted by strong take-up in Madrid and Barcelona. vacancy rates remain under 5% in the main markets in Q4 (3% in Barcelona and 5% in Madrid) • As large high-quality warehouses remain scarce, rents continue to increase. E-commerce is growing in Spain and will continue to be a driver of this sector. Investment: +21% (2018 vs 2017) • The market is stimulated by sustained growth of the Spanish economy with 2.6% GDP growth estimated in 2018. • A strong occupier market is supporting demand for logistics assets. In 2018, the prime yield dropped by 55bps to bottom at 5.3%.
16