Industrial property performance is set to improve in 2010 with Central and Eastern Europe leading the way, according to Tim Johnson, head of industrial and logistics at King Sturge. 'It will be a bumpy ride again this year but the CEE market is showing a pick-up in levels of activity and we are expecting to see some growth this year,' Johnson told PropertyEU at the Mipim fair in Cannes.

Industrial property performance is set to improve in 2010 with Central and Eastern Europe leading the way, according to Tim Johnson, head of industrial and logistics at King Sturge. 'It will be a bumpy ride again this year but the CEE market is showing a pick-up in levels of activity and we are expecting to see some growth this year,' Johnson told PropertyEU at the Mipim fair in Cannes.

The UK market also witnessed a sudden investment rally at the end of 2009, mostly fuelled by the lack of good product coming to the market. 'We believe that this trend will spread througout the Continent with a number of funds targeting industrial properties in Europe,' he added.

Appetite for industrial product entering 2010 has begun to improve, especially for larger logistics facilities and portfolios. In a new research report, King Sturge warns that investor demand will stay focused on prime assets; but with a scarcity of suitable stock investors are already showing signs of compromising on lease length or covenant, if not on location. Secondary properties look set for another difficult year.

King Sturge predicts that pent-up demand and a continuing lack of adequate product could drive prime yields lower in the first half of 2010 in a number of European markets, although occupational markets will remain precarious.

In the occupier market, demand in 2010 is likely to come from the sectors and occupiers that proved the most resilient in 2009 even though last year demand was skewed towards smaller unit sizes. The food industry, the discount retailing sector and logistics providers are some of the most active occupiers.