Take-up in the European logistics market could contract by as much as 35% this year as distributors consolidate and optimise existing centres, according to international property advisor Savills. Meanwhile property sales may increase as manufacturers seek to reduce property costs, the adiviser said. Rents have declined 6% in prime properties and 7% in secondary warehouses year on year compared to Q1 2008.
Take-up in the European logistics market could contract by as much as 35% this year as distributors consolidate and optimise existing centres, according to international property advisor Savills. Meanwhile property sales may increase as manufacturers seek to reduce property costs, the adiviser said. Rents have declined 6% in prime properties and 7% in secondary warehouses year on year compared to Q1 2008.
The restructuring in the industrial sector has largely been driven by falling GDP, which is forecast to contract by 4% on average over the course of the year across Europe, as well as a collapse in global manufacturing with exports set to drop sharply by as much as 12.6% over 2009. Savills believes the food industry will dominate the demand for space, in particular low-cost specialised retailers, whilst other manufacturers will seek to renegotiate leases, reduce production units, sublet part of their space or relocate to cheaper locations.
The Savills report records significant yield shifts have taken place in Dublin, Paris, Warsaw and Barcelona ranging from 200 basis points (bps) to 150 bps at the highest points, whilst the yield gap between prime and secondary stock in London, Schiphol (Amsterdam) and Oslo has widened.
Lydia Brissy of Savills European research said: 'Industrial companies will refocus their strategy to their core business by outsourcing their distribution needs and selling their properties. Distributors will restructure the supply chain to secure gains. Activity in 2009 will remain driven by the growing need to reduce costs.'
