Occupier demand for logistics space remains buoyant - JLL

Occupier demand for European distribution warehousing remained buoyant during the first six months of 2008 athough investment activity was down 38% year-on-year at EUR 4.5 bn, according to Jones Lang LaSalle's latest European Logistics Report. Occupier demand in the European logistics sector in the first half saw an increase of 10% on last year's volumes and was just 6% short of the record H2 2007 volume.

JLL said that globalisation, expansion into the Central and Eastern European (CEE) markets, the changing structure of warehousing functions and changing retail patterns, which are leading to new trends in the distribution of goods, all contributed to continued strong occupier demand across the region.

Alexandra Tornow, head of European Industrial Research at JLL said: 'In the current market conditions the majority of developers will now only start on a pre-let basis. Speculative construction will remain limited to those markets where persistent strong occupier activity is expected, in particular in the CEE. In Western Europe, Germany is experiencing some speculative development because of recent tight supply levels and strong demand.'

Total direct investment in warehousing property, which stood at EUR 4.5 bn over the first half, was down by 38% on the same period last year, but less prominent than the 44% decline recorded across investment in all commercial property sectors. Germany and Spain achieved increasing investment volumes, along with some smaller markets such as Finland and Italy.

For the fist time, the UK, which recorded EUR 940 mln of industrial investment activity, was knocked off the top spot as the most active European industrial investment market, as Germany took first place achieving EUR 1.1 bn of investment activity during the first half of the year. The third highest volume was recorded in Spain with just under EUR 600 mln, nearly three times more than a year ago.