European Industrial Occupier Conditions

Transcription

1 European Industrial Occupier Conditions Occupiers face looming supply shortage February 2013

2 Introduction Welcome to our latest industrial occupier conditions slide deck which accompanies our bi-annual industrial occupier report In this slide deck we present the latest trends in European logistics occupier markets and highlight future opportunities The economic outlook section sets the background for the future decision-making process in uncertain times The subsequent section on Occupational Markets examines the latest trends in competition for space, choice and costs. The section features: - Our European industrial clock, rental map, choice map and a market conditions matrix - A range of other various data and graphics We trust you find this presentation a valuable tool in your decision-making process 2

3 Economic Outlook: Improving Prospects but Impact of Crisis Continues

4 Improving Sentiment But Challenges Remain Improving global economic growth prospects encouraged by latest news and economic indicators But on-going economic problems, particularly in the southern periphery, will continue to drag down the overall Eurozone economy Downside risks to growth continue to include tight fiscal policy in many countries, very high and rising unemployment and difficult credit conditions Eurozone manufacturing production continues to fall the Manufacturing Purchasing Managers Index has remained in contraction territory for one-and-ahalf years However, the rate of decline eased in January 2013, seeing the PMI rising to an eleven-month high 4

5 Impact Of Crisis Remains GDP Growth Forecast % < 0% 1.3% % % % > 3.0% 1.0% 1.0% -0.1% -0.4% 0.7% 0.8% 0.7% 1.9% 3.1% 3.7% 3.4% -2.6% -1.4% 0.2% 1.1% -1.1% 0.0% 0.9% 0.8% 2.3% 0.8% 1.7% 4.3% -1.1% Source: Oxford Economics, January

6 Industrial Production Outlook Mixed 6 Industrial Production (% Change)

7 Export Growth Remains at Low Level but Accelerating in Later Years Export Growth pa (%) EU27 Export and Import Growth pa (%) Spain Romania Germany 15 EU27 Exports EU27 Imports F UK 10 Russia Czech Republic Finland Hungary France % Change 5 0 Sweden Italy -5 Belgium Netherlands Poland Source: IHS Global Insight, February

8 European Confidence Indicators Improving Exception is Industrial Sub-index which Fell Slightly in January Economic Sentiment Retail Trade Confidence, Industrial Confidence Economic Sentiment (LHS) Industrial Confidence Retail Trade Confidence Source: European Commission, February 2013, Ireland n/a 8

9 European Occupational Markets: High Competition for Modern Space as Supply Remains Constrained

10 Occupier Market Constrained by Shortage of Available Supply Declining occupier choice as new development continues to be demand-driven rather than speculative Occupiers continue to face strong competition for modern space as demand remains high compared with existing supply Significantly higher choice for secondary product Two options for occupiers: Secure built-to-suit agreements with less flexible lease conditions Occupiers less dependent on large modern requirements will be able to negotiate shorter leases, lower rents and higher incentives for existing buildings Rental growth outlook varies significantly across European markets Rents are set to fall in markets where vacancy levels remain relatively high while rental increases in select locations will be driven by dwindling modern supply 10

11 Overall Occupier Activity above Long-Term Average European Warehousing Take-Up (million sq m) million sq m year Annual Average Source: Jones Lang LaSalle, February

12 Germany accounts for the largest share of take-up, Russia sees the second highest take-up for the third year running Germany Russia Netherlands France UK Spain Italy Poland Belgium Czech Republic Hungary CEE Western Europe year average 2,000 4,000 6,000 8,000 10,000 12,000 Source: Jones Lang LaSalle, February ,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 5, sq m Distribution Warehousing Take-up >5,000 sq m (UK: >10,000 sq m) 12

13 Increasing Number of Markets with Restricted Occupier Choice for Modern Units Vacancy Rates, Q Edinburgh Birmingham Stockholm Helsinki Moscow London Amsterdam Rotterdam Hamburg Berlin Warsaw Brussels Frankfurt Prague <5.0% Madrid Barcelona Paris Lyon Munich Milan Rome Budapest Bucharest % % >15.0% Increase y-o-y Decrease y-o-y Stable Source: Jones Lang LaSalle, February

14 Development Activity Uneven Across Countries Under Construction: Q compared to Q Source: Jones Lang LaSalle, February

15 Continued Focus on Non-Spec Development Limits Readily Available Stock for Occupiers Source: Jones Lang LaSalle, February

16 Leading to Further Falling of Modern Occupier Choice 12-Month Outlook Belgium Czech Republic France Germany Hungary Italy Netherlands Poland Russia Spain UK Source: Jones Lang LaSalle, February 2013 Current Choice Low Medium Medium Low Very High Medium Medium High Low High High Future Choice 16

17 Occupiers Will Continue to Face Strong Competition - Driven by Structural Changes Five key drivers of future demand 1. The impact of demographic change Optimisation of supply chains through the use of seaports, airports, rail and road The evolution of manufacturing: the relocation of manufacturing closer to domestic markets 4. Retail change: the growth of (multi-channel) retail 5. Maturing markets: CEE and Russia 17

18 Expected Rental Declines in Select Markets Creating a Window of Opportunity in 2013 The bleak economic outlook and continued pressure on costs kept headline rents under slight downward pressure during Q Industrial floorspace is now cheaper in a number of locations compared with the end of 2011, i.e. Warsaw, Barcelona, Madrid, Amsterdam, Milan and Budapest The latest forecasts point to moderate rental increases this year in select markets such as Frankfurt, Hamburg, Amsterdam and London driven by further decreasing choice Meanwhile, large rental declines are expected in Moscow, Warsaw and Madrid this year driven by the high level of modern supply However, a window of opportunity in some of these markets will start closing in 2014 when rental growth is expected to accelerate 18

19 European Rental Map, Q Prime Warehousing Rent / sq m pa, Q Madrid 67 Dublin 59 Barcelona Edinburgh 76 Hamburg Amsterdam London 67 Rotterdam Berlin Warsaw Brussels Frankfurt Prague Paris Budapest 46 Munich Milan 54 Lyon Birmingham Rome 55 Stockholm 102 Helsinki 96 Bucharest 48 Moscow 102 Rental Changes Rents decreasing Rents stable Rents increasing % Rental Changes (Y-o-Y) > 10% 5 10% < 5% Source: Jones Lang LaSalle, February

20 EMEA Industrial Property Clock, Q Antwerp, Berlin, Brussels, Copenhagen, Moscow, Oslo, Rotterdam Dusseldorf, Frankfurt, Hanover, Munich, Prague Prime Rent Western Europe Prime Rent Eastern Europe Prime Rent Middle East and Africa Cologne, Hamburg Rental Growth Slowing Rents Falling Amsterdam London, Warsaw Rental Growth Accelerating Rents Bottoming Out Jeddah, Riyadh Johannesburg Lisbon Istanbul Athens, Birmingham, Budapest, Edinburgh, Leeds, Manchester, Zagreb Abu Dhabi, Barcelona, Belgrade, Bratislava, Bucharest, Dubai, Dublin, Glasgow, Helsinki Kiev, Lille, Lyon, Madrid, Marseille, Milan, Paris, Rome, Stockholm, Stuttgart Source: Jones Lang LaSalle, January

21 Favourable Incentives can still be Negotiated in Certain Locations, particularly for Second-Hand Stock Incentives most generous in Paris, Madrid and London % 160 EUR / m² pa % 7% 8% 15% 6% 9% 8% 45% 5% 8% London Moscow Amsterdam Munich Madrid Brussels Prague Budapest Paris Milan Warsaw Source: Jones Lang LaSalle, February 2013 Net Effective Rent Prime Rent % share = incentives as % of prime rent 21

22 Uneven Rental Growth is Expected over the Coming Years European Logistics Rental Growth (% pa) Logistics Rental Growth (% pa ) Source: Jones Lang LaSalle, December 2012 F Dublin Brussels Oslo Stockholm Frankfurt Antwerp London Hamburg Düsseldor Prague Milan Moscow Barcelona Berlin Manchest Munich Birmingha Rotterdam Budapest Warsaw Lyon Paris Amsterda Madrid Europe

23 European Market Conditions Matrix - Core Tenant Favorable Market Neutral Market Landlord Favorable Market MARKET TIMELINE COMMENTS Amsterdam Rents are likely to rise this year driven by reducing choice. Antwerp Barcelona Berlin Birmingham Rents are now close to pre-crisis levels and are expected to stabilise at this level during the next two years. Industrial space was cheaper at the end of 2012 compared with We expect prime headline rents to remain unchanged in 2013 before they rise next year. Rents are expected to stabilise at the current level this year before they rise in 2014 driven by limited supply. As occupier demand remains in balance with available supply, rents are expected to be broadly stable over the next three years. Brussels We expect rents to remain broadly stable in 2013 and 2014 sustained by limited available supply. Budapest Dublin Rents, which are now lower compared with the previous year, are expected to stabilise at this level over the next two years. Rents, 50% below their peak levels in 2008, are expected to be stable throughout However, reducing choice will contribute to rental increases in 2014 and Dusseldorf Following no rental changes in 2012, we expect rents to edge up over the next two years. Frankfurt Rents were unchanged throughout 2012, however they are set to rise this year driven by limited choice. Hamburg Driven by continued high competition for space, rents are anticipated to edge up in 2013 and Helsinki With demand and supply balance expected to remain broadly unchanged, we expect stable rental levels over the next two years. Source: Jones Lang LaSalle, February

24 European Market Conditions Matrix - Core Tenant Favorable Market Neutral Market Landlord Favorable Market MARKET TIMELINE COMMENTS London Rents are expected to rise in London this year driven by reducing occupier choice. Lyon No significant rental changes are expected over the next three years. Madrid We expect costs to remain competitive over the next two years due to high supply levels. Milan Rents, now significantly lower compared with last year, are expected to stabilise at the current level in 2013 before they rise in Moscow Rents are set to fall in Moscow this year as the supply pipeline is improving. Munich Paris We expect rents to decline this year driven by slowing competition. However, declining choice levels next year will push rental levels upward. With demand and supply balance expected to remain broadly unchanged, we expect stable rental levels over the next three years. Prague Rents will remain broadly unchanged over the next two years sustained by relatively strong competition. Rome We expect rents to stabilise at the current level this year before limited supply contributes to rental increases in Rotterdam Stable rents are expected over the next three years sustained by decreasing modern supply. Stockholm No major rental changes are expected in However, rents are set to rise from 2014 onward. Warsaw We expect costs in Warsaw to remain very competitive over the next few quarters due to relatively high choice levels. Source: Jones Lang LaSalle, February

25 Occupier Market Constrained by Shortage of Available Supply Declining occupier choice as new development continues to be demand-driven rather than speculative Occupiers continue to face strong competition for modern space as demand remains high compared with existing supply Significantly higher choice for secondary product Two options for occupiers: Secure built-to-suit agreements with less flexible lease conditions Occupiers less dependent on large modern requirements will be able to negotiate shorter leases, lower rents and higher incentives for existing buildings Rental growth outlook varies significantly across European markets Rents are set to fall in markets where vacancy levels remain relatively high while rental increases in select locations will be driven by dwindling modern supply 25

26 Contact: Alexandra Tornow Associate Director, Logistics and Industrial Research, EMEA Tel Nejc Jus Research Analyst, Logistics and Industrial Research, EMEA Tel Lee Elliott Head of Research, EMEA Tel COPYRIGHT JONES LANG LASALLE IP, INC This publication is the sole property of Jones Lang LaSalle IP, Inc. and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of Jones Lang LaSalle IP, Inc. The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the accuracy of this information. We would like to be informed of any inaccuracies so that we may correct them. Jones Lang LaSalle does not accept any liability in negligence or otherwise for any loss or damage suffered by any party resulting from reliance on this publication.