The industrial property sector is expected to continue to expand at a faster rate than other segments this year, with volumes hitting €20 bn for the first time, according to research from Cushman & Wakefield.
The industrial property sector is expected to continue to expand at a faster rate than other segments this year, with volumes hitting €20 bn for the first time, according to research from Cushman & Wakefield.
The sector significantly outperformed the wider market last year, with volumes up 57.4% at a six-year high compared to the total market gain of 27.3%, with retail up 19% and offices 22%. As a result, the industrial sector now has a 10% market share, its highest since 2004.
'With nothing short of a new industrial revolution now under way as multichannel retailing and changes to the supply chain impact, what we are seeing is not just a cyclical recovery but a major structural change and investors increasingly see industrial property as offering real growth potential for the future,' commented Nick Jones, head of EMEA industrial investment at Cushman & Wakefield.
Demand is coming from a broad range of investors, with North American players among the key movers last year but Asian and European buyers also strongly evident. The emergence of a number of platform buyers, with strong ambitions and firepower to match, has been a driver of the market as they target large portfolios. At the same time however, this has re-introduced a premium in portfolio pricing which has made it harder for many smaller funds to get into the market.
'The growth of the market for occupiers, developers and investors is set to continue and is part of a global trend driven by the growth of on- and offline trading,' noted David Hutchings, head of EMEA investment strategy at C&W.
Increased demand will bring more pressure on prime yields in core markets but higher yielding second-tier markets will also see more interest as investors look for new areas of buying opportunity. However, according to Hutchings, increased liquidity will bring secondary yields down in many areas.