European Logistics Market Fundamentals Q4 2016
European logistics take-up is riding high on the e-commerce wave. In its wake, development activity rises further as vacancy is shrinking to cyclical lows. This infographic takes a quick look back and what to possibly expect going forward. European Industrial & Logistics Occupier Market outlook for 2017 • Occupier demand is forecast to remain resilient despite mainly modest economic growth and heightened political risks. Our Supply Chain Activity Index points to a slight deceleration on 2016’s record high, but still trending upward. • New supply is likely to still be predominantly BTS. Vacancy rates are therefore projected to stay low in most major markets. • Our model-based forecasts imply moderate rental growth in aggregate across Europe this year, but specific supply and demand dynamics will determine growth rates in local markets.
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European Logistics Market Fundamentals Q4 2016
- 1. European Industrial & Logistics Logistics Market Fundamentals Q4 2016 jll.eu/il ©2017JonesLangLaSalleIP,Inc.Allrightsreserved.TheinformationcontainedinthisdocumentisproprietarytoJLLandshallbeusedsolelyforthepurposes ofevaluatingthisproposal.AllsuchdocumentationandinformationremainsthepropertyofJLLandshallbekeptconfidential.Reproductionofanypartofthis documentisauthorizedonlytotheextentnecessaryforitsevaluation.ItisnottobeshowntoanythirdpartywithoutthepriorwrittenauthorizationofJLL.All informationcontainedhereinisfromsourcesdeemedreliable;however,norepresentationorwarrantyismadeastotheaccuracythereof. European logistics take-up hits a new record high in 2016 Low vacancy levels and strong occupier demand drive further development, but most of this is build to suit (BTS) European prime rental growth remains very modest in aggregate in part because yield compression has enabled competitive rental terms on BTS space. YoY on 5-year average YoY in CEE YoY in Southern Europe YoY in Western Europe 12% 28% 35% Third Party Logistics 36% Other 7% E-Commerce 12% Manufacturing 17% 3% 10% 3PLs were the most active occupier group in 2016 – but space directly dedicated to e-fulfilment rose strongest Strongest growing occupier groups in 2016 Guy Gueirard Head of EMEA Industrial & Logistics guy.gueirard@eu.jll.com Jon Sleeman Head of EMEA Industrial & Logistics Research jon.sleeman@eu.jll.com Alexandra Tornow EMEA Industrial & Logistics Research alexandra.tornow@eu.jll.com Ryan Loftus EMEA Industrial & Logistics Research ryan.loftus@eu.jll.com For more information, contact: France, Spain and Russia registered lower take-up in 2016 compared with 2015, but all other countries posted an increase in take-up. All countries, except Russia, recorded higher take-up in 2016 compared with their respective 5-year average levels. 40% YoY in UK 16% YoY in Russia Take-up e-commerce driven YoY 3PL providers / express companies 48% 18% Immediately available space across the majority of European markets remains below total annual occupier demand (basedon5-yearaveragetake-up) Forthefirsttimeinthecurrentcycle,newcompletions andspaceunderconstructionexceedtheprevious peak.However,marketconditionsremainvery different,asthemajorityofnewspacenowisbuild-to- suitwhereaspreviouslyitwasspeculative. <6% New completions in 2016 Warehouse space under construction at end 2016 European aggregate vacancy rate at end 2016 YoY of current space under construction is speculative (20% if excluding Russia) on 5-year annual average 25% QoQ 10% YoY 27% on 5-year average 74% 25% 60% 0.3% 1.4% Q4 warehousing rents QoQ excl. Russia YoY excl. Russia Retail Companies 28% The importance of e-commerce as a demand driver is greater than our figures suggest because of knock-on effects on demand from logistics and express operators. That said, occupier demand remains broadly-based driven by business growth and ongoing pressures to restructure physical distribution networks to reduce costs and make supply chains more efficient.