KUALA LUMPUR (March 29): Germany recorded the strongest occupier activity in Europe’s industrial property market with 6 million sq m of space leased out last year, underpinning a record year in Europe’s industrial property market, said international property consultancy Cushman & Wakefield.
The continent’s industrial space saw take-ups reach 18 million sq m in 2015, a 7% increase from a year ago.
“Germany accounted for a 35% share of total take-up in the region and also witnessed the greatest yearly increase of 17%,” said the firm in their recently-published European Industrial and Logistics 2016 report.
“The fallout in the Volkswagen scandal and the slowdown in emerging markets have not yet translated into slowing demand. The European market has seen occupiers increasingly widening their scope and looking for modern premises in tier-2 locations,” it added.
France, Benelux (Belgium, The Netherlands and Luxembourg) and Central and Eastern European (CEE) countries also saw higher take-ups.
Leasing in France reached 5 million sq m, similar to 2014’s performance, while in Benelux, occupier activity rose 15% to 2 million sq ft.
“Built-to-suit solutions were favoured by occupiers looking for new modern premises, as a growing share of the French stock is fast becoming obsolete.
“Corporates remained focused on the North-South axis with a large part of the activity concentrated in the Paris region. Hypermarket chains, which are increasingly reshaping their supply chains, are the main drivers of demand,” it said.
The CEE also hit a new milestone with 4.7 million sq ft taken up in 2015, up by 17% from a year ago.
Poland, which is part of the CEE, accounted for over half of the space taken up at 2.5 million sq m, becoming a major player in the European market.
“Contrary to most western countries, developers are more willing to launch speculative developments in Poland, supporting a market which attracts large international occupiers, most notably online retailers looking for relatively lower operating costs.”
In contrast, the UK’s market remained subdued as only 2.7 million sq m of space was leased out last year, marking a 15% decline from 2014.
However, the report noted that demand from e-retailers, supermarket chains and third-party logistics operators remained solid.
“Built-to-suit solutions are becoming increasingly common across the region, as a relative lack of modern supply is dampening market activity,” it added.
Europe’s industrial market is expected to see its rental values rising in the coming years, at an average of 1.5% per annum up to 2020 on shortage of good supply.