Savills has reported strong investment in European logistics this year, reaching €14.3bn in the first quarter (+19.6% year-on-year), due to global supply chain challenges and the e-commerce boom.
Germany led for investment volumes with €4.1 bn, ahead of the UK (€2.9bn), the Netherlands (€2.0 bn) and France (€1.1 bn).
With 10 million m2 of warehouse space leased, take-up is 28% above the five year average, with Germany (2.4 million m2), the Netherlands (2.2 million m2), Poland (1.5 million m2) and the UK (1.3 million m2) driving the majority of leasing activity.
Marcus de Minckwitz, head of Industrial & Logistics, Savills EMEA, commented: ‘The main drivers behind the sector’s stellar growth continue to be the post pandemic e-commerce boom across the continent and, more recently, in light of geopolitical crises, the race for additional warehouse space to secure international company supply chains.’
Kevin Mofid, head of Industrial & Logistics Research, Savills EMEA, added: ‘Our outlook is still extremely positive for the year ahead. All of the metrics looking at the occupational market remain strong with vacancy trending downward and take-up trending upwards. Compared with other sectors, the fundamentals around logistics remain strong. With this in mind, we anticipate logistics investment transactions in the region of €60 bn to be completed this year, comparable to last year’s record setting €62 bn.’
According to Savills European Logistics Census 2021, occupiers anticipate the shortening, or reshoring, of supply chains to mitigate risk due to the pandemic.
In Poland, China’s latest lockdowns and the war in Ukraine have resulted in leasing activity reaching an all-time high this quarter.
Undersupply will continue to boost investor demand for industrial assets, with Dublin (1.1%), Denmark (1.5%), Barcelona (1.7%), Czech Republic (2.0%), the UK (2.7%) and the Netherlands (3.2%) being the most undersupplied markets.
The shortage of prime stock has driven prime rent growth, increasing, on average, by 5.9% over the past 12 months, with significant increases observed in London (+20%) and Warsaw (+20%).
The weight of capital still targeting European logistics has compressed average prime yields by 23bps to 4.08% in the last six months, according to Savills.
Sweden led with 65 basis points, followed by Finland (40bps); Italy (35bps); Belgium, Czech Republic, Denmark, France and Norway (all by 25bps); Germany (20bps); and The Netherlands (10bps); while the UK, Ireland and Portugal were the only markets to remain stable.
Savills also recorded strong levels of European development in Q1 2022, with Poland’s logistics stock increasing by 16.5% y/y, followed by Madrid (11.6%), the Netherlands (8.8%) and the UK (5.5%).
Vacancy rates continue to fall even further this year, to an all-time low Eurozone average of 3.3%.
