- European industrial and logistics take-up increased 7% to 18 million sq m in 2015
- Germany is the main occupier hotspot, with take-up reaching 6 million sq m
- Expected growth rate of 1.5% p.a. to 2020 for prime industrial rents
- EUR 21bn invested in 2015, close to the 2014 record
The European industrial market posted another solid performance in both occupier and investment terms in 2015, according to the latest European industrial market report out today from Cushman & Wakefield.
Occupier activity for industrial and logistics space increased to 18 million sq m, setting a new record and representing a 7% increase on 2014. Activity was strongest in Germany where take-up reached 6 million sq m, a 17% increase on a year ago. CEE was the other success story of 2015, with 4.7 million sq m let. Poland is competing with France and the UK for second position in the European ranking of take-up activity, with 2.5 million sq m let during the year.
Despite rising geopolitical risks, the prospects for the European industrial market across the remainder of 2016 are positive. Disappointing results registered by the manufacturing sector at the end of 2015 have been balanced by strong demand from European consumers.
Report author Magali Marton, Head of EMEA Research, said: “A growing imbalance between demand and supply is becoming more apparent in many European markets. Retailers and industrial companies are reshaping their supply chain in favour of built-to-suit solutions in a market where there is a clear lack of supply.”
The growing imbalance between poor supply and strong demand has put upward pressure on rental values across the board. Cushman & Wakefield forecasts an average rental growth rate of 1.5% per year over the next five years at a European level. Peripheral markets, which suffered the most during the crisis, are predicted to witness the strongest rebounds.
Rob Hall, Senior Director, Industrial and Logistics EMEA, commented: “Prime rents in Europe are expected to grow at an average rate of 1.6% per annum up to 2020, outperforming those expected for offices and retail over the same period. Dublin is forecast to improve the most, with expected rental growth of 5.3% per annum up to 2020. Having been resilient during the crisis, rents are forecast to remain quite strong in the UK, especially in regional markets such as Birmingham and Leeds.”
With EUR 21bn invested, the European industrial investment market posted another solid year in 2015, only slightly below the EUR 22bn registered in 2014, the all-time peak. The industrial market remains dominated by local players. However, the share of cross-border investors has been growing steadily for several years, with Asian investors becoming active on large ticket deals.
Mark Webster, Partner, Head of Industrial and Logistics EMEA, said: “The weight of capital seeking investment opportunities remains considerable, and the industrial sector is a highly desirable alternative asset class. Opportunistic players coming from a wider range of countries are sweeping across Europe so 2016 should remain buoyant, especially with several large portfolio deals in the pipeline.”
Tom Listowski, Partner and Head of Industrial and Logistics Agency Poland and CEE Corporate Relations, Cushman & Wakefield, said: “On the back of record take up levels in 2015, the CEE region is set to maintain its positive momentum in 2016. Demand from occupiers from the logistics, automotive and e-commerce sectors is playing a major role in the development of the industrial and logistics market. With total stock now reaching over 10 million square metres, Poland holds a dominating position in CEE in regards to total stock, amount of space being leased and new stock being added each year which will continue. Neighboring CEE countries including the Czech Republic, Slovakia, Hungary and Romania are also recording increased occupier, development and investment activity which is a very positive sign and attracting major global manufacturers to this region of Europe.”