A two-tier industrial and logistics market is emerging across Europe as cost-cutting by occupiers drives demand for high-quality space.
New research from CB Richard Ellis has found that occupiers are rationalising their property use and seeking to restructure leases, sub-let excess space or upgrade to better premises.
Its report, Industrial and Logistics Market View, says this is driving demand for efficient buildings, and well-located properties with the greatest potential for flexibility and adaptability.
Guy Frampton, head of EMEA industrial and logistics, said: “A two-tier market has emerged in some European markets as rents begin to rise for tailor-made facilities, despite an overall rental rate downturn on existing buildings last year.”
The research found retail-led activity continues to drive the logistics markets, with demand remaining comparatively stable in staple goods sectors.
For example in Germany, one of Europe’s most mature logistics markets, leasing activity is generally weakening, but also becoming more tightly focused on the main markets and the best buildings.
Along with rising yields and expensive financing, this is pushing up rents for new build-to-suit space to around €70 sq m (£6 per sq ft) per annum.
Industrial investment yields across Europe rose by around 100 basis points during 2008, forcing up rents on build-to-suit developments still further.
Frampton said: “Rising yields have put upward pressure on rents and downward pressure on land values.
“The challenge for the occupier is to find developers with the ability to carry out large-scale development in multiple markets to take advantage cyclical demand and secure premises that will serve their business needs over the medium to longer term.”
