EUROPE - Industrial commercial property markets in Central and Eastern Europe (CEE) and South America were the best performing worldwide in 2008 and are likely to continue doing well, according to research from Cushman & Wakefield.
The latest edition of ‘Industrial Space Across the World' said annual rental growth in CEE was 6.7% compared to the global average of 2.4% which was down from 6.1% on the previous year.
The shortage of quality accommodation and the increased demand also meant Polish and Ukrainian markets were particularly active in 2008, with rents increasing by 28% and 25% respectively.
"The CEE region has been outperforming its "old" European neighbours for the last decade, in terms of both growth in construction and take up of industrial space," said Ferdinand Hlobil, head of industrial for Cushman & Wakefield CEE.
"The shift of production and distribution from the West to the East has been the main driver over recent years."
Hlobil said he expected this shift to continue, given that around 40% of Europe's population is located in the CEE region.
"The large potential consumer market in CEE is still very much underdeveloped and, even when taking into account the present global crisis, we expect the growth of the industrial market to continue in the medium term," he added.
Industrial rents grew in South America by 12.4% during 2008, with Rio de Janeiro recording the highest global rise of 46% thanks to the improved domestic economy.
Mário Sérgio Gurgueira, from Cushman & Wakefield in Brazil said: "This has seen consumer demand rise and has consequently resulted in more sales, more warehousing and more transportation.
"The outlook for the market indicates lower demand but there is still evidence of schemes going ahead at the moment, because demand for high quality buildings is still evident," he added.
Rents in Africa and the Middle East also increased by 23% last year while the most expensive locations were in Israel, boosted by high demand from high tech companies and logistics operators.
London's Heathrow was the world's most expensive industrial location, charging on average €185 per square metre per year. Tokyo and Dublin came second and third with occupancy costs of €179 and €157 respectively.
The Americas' most expensive locations were San Francisco Peninsula, Calgary and Vancouver. Falling employment levels resulted in fewer leasing activities in 2008 and this is set to continue, with renewals likely to make up most of the activity.
Barrie David, senior research analyst at Cushman & Wakefield, said: "Falling take-up is a trend evident across most global industrial markets and one that is expected to continue well into 2009."
The markets most reliant on manufacturing are likely to be affected the most, while core markets and transport hubs will be best placed to weather the downturn in 2009.
C&W said less demand for industrial space will increase downward pressure on rental values and cause rental growth to flatten out in 2009.
Similarly, developments are expected to be limited and will not start recovering until 2010.
The report said the recovery of the industrial commercial property markets would depend on the improvement of the major developed economies.
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