AEW RESEARCH WEBCAST LOGISTICS: THE LOGICAL NEXT STEP 28 SEPTEMBER 2017

Transcription

1 AEW RESEARCH WEBCAST LOGISTICS: THE LOGICAL NEXT STEP 28 SEPTEMBER 2017 RESEARCH & STRATEGY Hans Vrensen MRE, CFA MANAGING DIRECTOR HEAD OF RESEARCH & STRATEGY Tel +44 (0) Ken Baccam MSc DIRECTOR Tel +33 (0) FOCUSED ON THE FUTURE OF REAL ESTATE

2 1 INTRODUCTION 2 EUROPEAN MARKET OVERVIEW 3 BIG DATA EXPERIMENT 4 UK MARKET UPDATE 5 KEY VIEWS Focused on the Future of Real Estate 2

3 INTRODUCTION Focused on the Future of Real Estate 3

4 LOGISTICS SHOWS GOOD RISK & RETURNS ACROSS UNIVERSE 30 most liquid logistics markets rank well against 70 office and retail markets Low return High return Office Average Office Retail Average Retail Logistics Average Logistics Size of bubble = liquidity score High risk Low risk Sources: AEW Focused on the Future of Real Estate 4

5 EUROPEAN MARKET OVERVIEW Focused on the Future of Real Estate 5

6 DEMAND: LOGISTICS TAKE UP DRIVEN BY RETAIL & E-COMMERCE Affluent and densely populated area show biggest positive impact EUROPEAN TAKE UP EVOLUTION ( 000 SQM) DENSITY, INHABITANTS PER SQM Avg. 14, Average Czech Rep Poland Italy Spain Netherlands Germany France UK Sources: AEW, Eurostat, E-Commerce Europe, Centre for Retail Research 2016 Focused on the Future of Real Estate 6

7 ONLINE COMMERCE, THE GLOBAL GAME ENHANCER Further growth expected in e-commerce share of retail E-COMMERCE SALES (VOLUMES IN BILLION, % CHANGE FROM ) ONLINE SHARE OF RETAIL TRADE ( E) % 18% 16% 14% 12% 10% 8% % +81% E 6% 4% % % +74% +51% +104% +117% 0% E Sources: AEW, Eurostat, E-Commerce Europe, Centre for Retail Research 2016 Focused on the Future of Real Estate 7

8 SUPPLY: LOW VACANCY & LIMITED SPECULATIVE DEVELOPMENT Non-CEE pipeline remains disciplined, with increasing land shortages PIPELINE VS STOCK EUROPEAN SPACE UNDER CONSTRUCTION 12% 10% Russia 8% Hungary UK France Vacancy rate 6% Italy Spain Netherlands Poland Czech Rep 4% Germany Slovakia Romania 2% Share of speculative 0% 0% 2% 4% 6% 8% 10% 12% 14% Pipeline as % of stock Space under construction Sources: AEW, JLL, CBRE Focused on the Future of Real Estate 8

9 YIELDS: AT HISTORICAL LOWS AS ACTIVITY SPREADS With improved liquidity, further tightening expected in the short term PRIME NET YIELDS (%)) GEOGRAPHIC LOGISTICS INVESTMENT TRANSACTION DISTRIBUTION ( ) size in sqm BENELUX France Germany CEE core Southern Europe Sources: AEW, CBRE, RCA Focused on the Future of Real Estate 9

10 BIG DATA EXPERIMENT Focused on the Future of Real Estate 10

11 BIG DATA APPROACH PROVIDES ALTERNATIVE SOURCE ON STOCK Satellite images are used to identify logistics buildings MUNICH REGION LOGISTICS BUILDINGS IN MUNCH REGION Sources: AEW, ESA, GeoPhy Focused on the Future of Real Estate 11

12 APPROACH CAN BE UPSCALED ACROSS EUROPE Filters are used to identify logistics buildings LOGISTICS BUILDINGS LOCATED IN FELDGEDING SUB-MARKET LOGISTICS STOCK IN MAJOR MARKETS ACROSS EUROPE Sources: AEW, GeoPhy Focused on the Future of Real Estate 12

13 UK MARKET UPDATE Focused on the Future of Real Estate 13

14 DESPITE BREXIT VOTE, AMAZON-LED TAKE UP SET NEW RECORD IN THE UK Amazon will trigger reaction from competitors to expand logistics footprint ANNUAL OCCUPIER TAKE UP (MILLION SQ FT) BY TYPE AMAZON SHARE OF ANNUAL TAKE-UP OF ALL LOGISTICS SPACE 60 60,000, ,000, ,000, Sq Ft 30,000, ,000, ,000, Internet retail Retail & Wholesale (ex internet retail) Manufacturing Services Other / unknown Logistics Take-up (ex Amzon) Amazon Average Average (ex Amazon) Sources: AEW, Gerald Eve, CBRE & RES Focused on the Future of Real Estate 14

15 RENTAL GROWTH NOT EXPECTED TO BE STOPPED BY BREXIT Consumer led demand not expected to be materially impacted RENTAL VALUE GROWTH (%PA) LOGISTICS RENTS IN KEY UK MARKETS 2.25% size in sqm 2.20% 2.15% 2.10% 2.05% 2.00% 1.95% PMA - Distribution Warehouse IPF Consensus - Industrial AEW - Logistics Sources: AEW, IPF, PMA & Savills Focused on the Future of Real Estate 15

16 DEVELOPMENT PICKING UP, AS ACQUISITION YIELDS HAVE TIGHTENED Share of speculative development is down, while development yields remain attractive TOTAL DEVELOPMENT COMPLETIONS (MILLION SQ FT) INITIAL YIELD TO DATE AND FORECAST 35,000, % 30,000, % 25,000, % 20,000, % 200+ bps development premium 15,000, % 10,000, % 5,000, % H Purpose-built Speculative 4.5% Sources: AEW, Gerald Eve, CBRE & RES Focused on the Future of Real Estate 16

17 KEY VIEWS Focused on the Future of Real Estate 17

18 LOGISTICS: THE LOGICAL NEXT STEP Secondary western European logistics markets show most attractive risk-return profiles Take-up expected to remain strong, as its fundamental retail and e-commerce drivers are structural New development has picked up, but little is speculative and most focused on low vacancy markets Rental growth will be limited to high demand and low supply markets only More yield compression is expected in the next year, as better liquidity pushes risk premiums down Post Brexit, UK logistics speculative development has declined leaving positive rental growth forecasts Source: AEW Focused on the Future of Real Estate 18

19 QUESTIONS & ANSWERS RESEARCH & STRATEGY Hans Vrensen MRE, CFA MANAGING DIRECTOR HEAD OF RESEARCH & STRATEGY Tel +44 (0) Ken Baccam MSc DIRECTOR Tel +33 (0) Thank you for your feedback! Focused on the Future of Real Estate BOSTON LONDON PARIS DÜSSELDORF HONG KONG AEW.COM Focused on the Future of Real Estate 19