Logistics : excellent 2016, trends for 2017

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1 Logistics : excellent 2016, trends for 2017 Walter Goossens Head of Industrial Leasing 21 March 2017

3 , an excellent year for logistics property JLL 2017

4 Demand for logistics high despite moderate economic growth 2016 annual European take-up sets new record 19.1 million sq m +11% +28% YoY on 5-year average 2016 annual European investment volumes surpass previous record 22.2 billion +5.1% YoY +42% on 5-year average 2017 Jones Lang LaSalle IP, Inc. All rights reserved. 4 Source: JLL

Logistics in Belgium 2016 was an excellent year for logistics property, with a

, 127% above the volume of 2015, and also well above the 5-y average for the

More transactions than average : 65 transactions in 2016, against 51 in the past

5 Logistics in Belgium 2016 was an excellent year for logistics property, with a take-up volume of 1.1 million sq.m., 127% above the volume of 2015, and also well above the 5-y average for the period , 675,000 sq.m. More transactions than average : 65 transactions in 2016, against 51 in the past 5 years ( ). Large transactions are back : 20 transactions above 20,000 sq.m. in 2016, 82% above the 5-year annual average of #11. The drivers behind the take-up are mainly centralisation and replacement of existing activities but also increase of e-commerce related operations Jones Lang LaSalle IP, Inc. All rights reserved. 5

8 Geographical spread of logistics take-up Take-up 2016 compares favourably with 2015 and 5-y average Antwerp-Brussels E313 Antwerp-Ghent 286,000 sq.m. 263,000 sq.m. 420,000 sq.m. Other zones : 92,000 sq.m. Walloon axis 36,000 sq.m. 5-y ave Jones Lang LaSalle IP, Inc. All rights reserved. 8

9 Logistics take-up split by type of transaction Lettings vs. acquisitions volumes 2016 Lettings Existing vs. Turn-key projects 2016 Acquisitions Existing vs. Turn-key projects % 42% 45% 58% 55% 89% Lettings Acquisitions Existing Turn-key project Existing Turn-key project 2017 Jones Lang LaSalle IP, Inc. All rights reserved. 9

Grobbendonk Bilzen ANTWERP EAST PORT Groep

10 Largest logistics take-up volumes 2016 Port of Antwerp Kallo (Antwerp Left Bank) Loghidden City KTN Owner-occupation Q ,000 sq.m. INDUSTRIAL ZONE Van Moer Group Build-to-suit Q ,000 sq.m. Grobbendonk Bilzen ANTWERP EAST PORT Groep Heylen/Ceva Logistics Pre-letting Q ,500 sq.m. by IZ Genk-Zuid Montea/Carglass Pre-letting Q ,000 sq.m Jones Lang LaSalle IP, Inc. All rights reserved. 10

Q4 2016 Transportmedia 50,000 sq.m. 44,000 sq.

Decathlon Pre-letting Q3 2016 40,000 sq.m.

11 Largest logistics take-up volumes 2016 Olen Willebroek Domuslaan Casa International Owner-occupation Q1 2016/ MG De Hulst MG RE / Nedcargo Pre-letting Q Transportmedia 50,000 sq.m. 44,000 sq.m. by Willebroek Ham MG De Hulst MG RE / Decathlon Pre-letting Q ,000 sq.m. by Made in Limburg INDUSTRIAL ZONE Nike Owner-occupation Q ,000 sq.m Jones Lang LaSalle IP, Inc. All rights reserved. 11

13 2. Trends for 2017 JLL 2017

14 2.1 Logistics property market trends

16 Turn-key projects dominate logistics pipeline Sq.m Grafiektitel KTN Port of Antwerp : 100,000 sq.m. Mobis Beringen : 55,000 sq.m. Ceva Logistics : 51,500 sq.m KTN Antwerp : 100,000 sq.m. Bpost NOH : 60,000 sq.m. Carglass Bilzen : 50,000 sq.m FS Non-Spec FS Spec Astitel Completions y Average e 2018e Astitel 2017 Jones Lang LaSalle IP, Inc. All rights reserved. 16

Vacancy rate remains low Stock (as at Q4

17 Vacancy rate remains low Stock (as at Q4 2016) Logistics axis Brussels-Antwerp* 6,475,000 sq.m. Stock (as at Q4 2016) National* + 22,000,000 sq.m. Vacancy 3.4 % Vacancy <5 % *excl. Antwerp Port 2017 Jones Lang LaSalle IP, Inc. All rights reserved. 17

18 Shortage of land l l l l Shortage of available land for logistics development Typical demand for logistics operations requires plots as from 40,000 sq.m. up to 200,000 sq.m. Shape of the plots needs to be rectangular Almost no dedicated logistics parks l Low site density : maximum ± 45 to 50% 2017 Jones Lang LaSalle IP, Inc. All rights reserved. 18

19 Yield compression continues % 10,00 9,50 9,00 9 8,50 8,00 7,50 7,00 6,50 6,00 5,50 8,9 7,9 7,9 8 7,75 7,75 7, ,5 7,75 6,8 6,75 6,15 7,5 7,75 7, ,5 6 6,25 6,85 % 5,85 % e Logistics (Brussels-Antwerp) Semi-industrial (Brussels - Flemish Brabant) Based on 6/9 year leases 2017 Jones Lang LaSalle IP, Inc. All rights reserved. 19

20 2.2. New industrial (r)evolution

21 Disruptive forces (global megatrends) already have and will continue to have profound impacts on future supply chains especially where they converge and interact Technological change Globalization Urbanization Demographic change Sustainability incl. climate change & resource scarcity 21

22 Three topics will have the most significant impact on supply chain strategies and real estate demand in the next 5-10 years Technological advancement Right- Shoring City logistics 22

23 10 game-changing trends in supply chain Technology and supply chain disruption creates huge opportunities and challenges Better visibility of and responsiveness to customer demand Increased visibility and agility of supply chains Smart factories / warehouses & new technologies: new processes Reduced risk of disruption in manufacturing and distribution More automation in warehouses, incl. robotics Growing risk of weather events & natural disasters leading to SC disruption Costs and quality issues & growing risk of disruption due to averse world events Continued digitization in retail markets: online vs. offline Last mile complexity: growing cities, congestion, restrictions Expanding delivery options & shorter delivery times 23

24 Growing complexity in last mile delivery Respondents believe customers route of choice in delivery over the next 5 years will be: City Logistics 29% Residential (home) delivery 27% Click & Collect 25% Delivery to alternative networks 15% UBER-style deliveries 7% Other alternatives 24

Occupational demand to focus on e-fulfillment and fast throughput Development activity to move away from traditional storage buildings Rising demand for cross-dock facilities to handle rapid

25 Occupational demand to focus on e-fulfillment and fast throughput Development activity to move away from traditional storage buildings Rising demand for cross-dock facilities to handle rapid throughput Continued strong demand sustaining e-fulfilment (incl. the whole range of large to small facilities) Less demand for traditional storage space Moderately rising demand for industrial facilities (production taking place closer at home) 25

Rising demand for specific types of facilities Europe s logistics and industrial facilities will become more diverse Consolidation centres Multi-modal logistics

26 Rising demand for specific types of facilities Europe s logistics and industrial facilities will become more diverse Consolidation centres Multi-modal logistics platforms in cities Multi-storey ramped logistics facilities Campus developments for co-location of manufacturing and R&D Supplier parks for re-shored manufacturing activities 26

Occupier demand will become more specific Building specifications will adapt to new processes inside and outside of the warehouse Taller buildings (to

27 Occupier demand will become more specific Building specifications will adapt to new processes inside and outside of the warehouse Taller buildings (to accommodate growth in automation) Secure 24/7 wireless access Less staff amenities and car parking as workforce declines Multi-storey ramped logistics facilities 27

Changing location requirements will drive demand looking at specific criteria whilst existing logistics and industrial clusters will continue to evolve Close to cities /

28 Changing location requirements will drive demand looking at specific criteria whilst existing logistics and industrial clusters will continue to evolve Close to cities / city fringe Urban logistics (entering large cities) Re-shoring / near-shoring locations Access to multi-modal sites 2017 Jones Lang LaSalle IP, Inc. All rights reserved. 28

29 Real estate implications Digital disruption will drive an evolution in the type and location of logistics facilities City Logistics Logistics buildings will get taller Multi-modal logistics platforms in cities Rising demand for faster throughput facilities but declining demand for storage space Warehouses must have secure and ubiquitous wireless access Declining space for staff amenities and car parks Declining dependence on locations with strong workforce Consolidation centres in cities and at the city fringe Multi-storey ramped logistics facilities 29

Logistics Property in Belgium

1 / pulse BELGIAN LOGISTICS MARKET FEBRUARY 2016 Logistics Property in Belgium 2015 was a modest year for take-up Quarterly Market Update - Pulse - February 2016 Liège, DL Trilogiport - 150,000 sq.m. logistics