European logistics take-up falls from coronavirus highs

Take-up volumes for logistics space across EMEA have come down from the heights seen during the pandemic and recorded just over 75m sq ft in H1 2023. Colliers’ latest report on the sector shows that the 12-month and biannual rolling take-up figures reflect the downward trend, indicating year-on-year declines of 25.1% and 35.1% respectively. However, these aggregate figures mask differences in take-up between markets. By mid-year 2023, 75% of markets witnessed falls in take-up levels, while the remaining 25% saw rises in take-up. Birmingham was one of the strongest performers, helping to make up that 25% of the market. It saw rolling annual growth of 33%, putting it just behind Szczecin in Poland (57%) and the Dutch cities of Rotterdam (42%) and Tilburg (41%), and ahead of Amsterdam (31%). Colliers said Birmingham had seen steady demand for mid-box units between 30,000 sq ft and 99,999 sq ft in H1. Included in this size band is Nuovo Foods’ lease for 85,000 sq ft at Cygnus 6 in West Bromwich. Another mid-box deal saw Connect Fulfilment Services take 64,000 sq ft at WS2 Industrial Estate in Walsall on a 10-year term, while at the smaller end of the size bracket Fablink UK signed for 49,000 sq ft at Air 50 in Wolverhampton on a 15-year lease. Momentum in Manchester’s industrial market, on the other hand, has slowed over the past 12 months after witnessing the most active two years on record during 2021 and 2022. Activity continues in the mid-box size band between 40,000 sq ft and 60,000 sq ft. Trafford Park remains an active market in this size range, with lettings including hydraulic supplier Hyva taking 45,000 sq ft at Churchill Point and FPS Distribution taking 40,000 sq ft at Empire 40 on Fifth Avenue on a 15-year lease. Despite the recent slowdown in take-up, the vacancy rate across EMEA has remained low at 3.6% in Q2 2023, Colliers said. Nearly half of the markets expect vacancy to remain stable during the coming year, while 16% of markets expect a further drop in vacancy levels. A shortage of land for development is a common theme in many markets, particularly in densely populated cities, where competition is intense from other sectors such as housing. However, so far development activity has held firm, with development completions in EMEA increasing by 4.9% year-on-year in Q2 2023 and 8.7% in H1 2023. Stricter legislation aiming at protecting greenfield land has caused a surge in demand for centrally located brownfield sites that can accommodate new buildings. [caption id="attachment_1203150" align="alignright" width="200"] Karin Witalis[/caption] Karin Witalis, associate director in EMEA research at Colliers, said: “The occupational market remains favourable towards landlords in most markets. Rental growth continues to be positive, often beating medium-term inflation targets, with very low vacancy rates for core product in core locations. “Our outlook suggests further rental growth for city warehouses in 70% of markets, and in 68% of markets for larger logistics and distribution space. That said, rates of rental growth are expected to slow in the coming year as more speculative space comes to market.” Occupier demand remains strong on the back of growing demand from retailers and last-mile logistics operators seeking to streamline their commodity flows and service e-commerce demand. To send feedback, e-mail julia.cahill@eg.co.uk or tweet @EGJuliaC or @EGPropertyNews Main photo © Marcin Jozwiak/Unsplash Portrait © Colliers