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European Industrial and Logistics Brochure Autumn Winter 2013


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  • 1. Industrial & Logistics European Market Overview AUTUMN/WINTER 2013 Accelerating success.
  • 2. As a leading property consultancy, Colliers International has an experienced Industrial and Logistics team with experts strategically located across Europe providing regional expertise with detailed local knowledge, in order to accelerate the success of our clients. Our growing business operates from 85 offices with a team of over 130 professionals, with the further support and backing of the wider Colliers International business. Our comprehensive knowledge and experience is used to provide clients with advice and assistance that generates earning power for them. Working with a diverse range of clientele on varied projects gives us a good understanding of their specific needs. The professionalism and quality of service we offer is based upon our detailed insight into the sector with our advice firmly anchored in commercial reality. Dealing with occupiers, developers or investors, we strive to provide the highest level of service supported by our industry expertise. Our specialist research provides our clients and the overall industry with vital information and trends required to aid their decision making process. Please visit for more information about our services, the markets we cover and our detailed research.
  • 3. Table of Contents > EUROPEAN MARKET OVERVIEW 4 > EUROPEAN MARKETS Western Europe Austria ................................................................................................................................. 9 Belgium ................................................................................................................................ 11 France .................................................................................................................................. 13 Germany .............................................................................................................................. 15 Ireland .................................................................................................................................. 17 Netherlands ......................................................................................................................... 19 Spain .................................................................................................................................... 21 UK ........................................................................................................................................ 23 Central and Eastern Europe Belarus ................................................................................................................................ 26 Czech Republic .................................................................................................................... 28 Hungary ............................................................................................................................... 30 Poland .................................................................................................................................. 32 Romania ............................................................................................................................... 34 Russia .................................................................................................................................. 36 Slovakia ............................................................................................................................... 38 Southeast Europe Albania ................................................................................................................................. 41 Bulgaria ............................................................................................................................... 42 Croatia ................................................................................................................................. 44 Serbia .................................................................................................................................. 46 Turkey .................................................................................................................................. 48 Nordics Norway ................................................................................................................................. 51 Sweden ................................................................................................................................. 53 Baltics Estonia ................................................................................................................................. 56 Latvia ................................................................................................................................... 58 Lithuania .............................................................................................................................. 60 > COLLIERS INTERNATIONAL Corporate Solutions.................................................................................................................... 62 Global Services........................................................................................................................... 64 > KEY AND DEFINITIONS INDUSTRIAL AND LOGISTICS | EUROPE 65 COLLIERS INTERNATIONAL P. 3
  • 4. Industrial & Logistics Market Report H1 2013 EMEA Despite continuous slight volatility, the latest monthly industrial production figures do provide some positive sentiment, as June represented the fourth month of the last six in which production had risen. According to Eurostat, industrial production in June rose by 0.7% in the euro area and by 0.9% in the EU28. In the previous month, production fell by 0.2% and 0.5% respectively. Annual comparison shows positive results that have not been seen since 2011; production rose in June by 0.3% in the euro area and 0.4% in the EU28. It may be too early to signify a trend, but encouraging figures nonetheless. In terms of annual change Estonia, Lithuania and Slovakia continued to record uninterrupted growth. Very positive news came from Portugal, where production rebounded with 2.2% y-o-y growth which was the third consecutive positive result (4.3% in May and 2.8% in April in comparison to the same months of previous year). Retailers drive demand for large logistics space The development pipeline remains suppressed in the majority of markets, with developers limiting their activity mainly to build to suit projects and space secured by pre-lease agreements. Yet, Russia and Turkey are seeing high volumes of space under construction. While Moscow suffers from a shortage of space (vacancy rate at 0.3%), Istanbul has high vacancy levels but, as a significant amount of existing stock does not meet tenants’ requirements, development activity remains robust. Prime warehouse rents in the vast majority of the monitored markets remained stable. However, limited availability of modern space has pushed up the rents in some locations. The most significant increase of prime warehouse rents in INDUSTRIAL AND LOGISTICS | EUROPE the first half of the year took place in Minsk (16.7%) and Zagreb (10%), as well as in Istanbul, Venlo, Riga, Vilnius and Gothenburg. Several large (>30,000 sq m) lease transactions were signed across the region, the vast majority of which were build to suit projects and pre-lease agreements. Retailers, both online and brick-and-mortar, are leading the demand being responsible for nearly half of these transactions. Third party logistics and distributors are not left far behind, with over one third of the large contracts concluded. Most of these transactions took place in Western Europe and the UK confirming this region’s dominance as a main distribution hub in Europe. Top deals included John Lewis’ BTS distribution centre in Milton Keynes, UK (62,708 sq m) carried out by Gazeley and a pre-lease of 72,000 sq m by IKEA in Logopark North, Moscow, Russia. From the retail sector we are also seeing strong expansion of food and discount retailers, many of whom develop their distribution network on an owner-occupier basis. In France, Intermarché and Lidl have recently started construction of new distribution centres, while in Belgium, Colruyt Group plans to start construction of its new centre in Lessines in August. Strong growth in investment volumes In accordance with our expectations stated in our previous report, the industrial and logistics sector has enjoyed further investor interest. In the first half of the year we saw the highest industrial investment volumes since the beginning of the crisis. The investment volumes reached €7.5 billion, a 28% year-onyear increase. The volumes were pushed up by a €1.2 billion portfolio purchase consisting of 195 properties (ca. 4.7 million sq m) across 11 European countries by the joint venture of Norges Bank Investment Management and Prologis. COLLIERS INTERNATIONAL P. 4
  • 5. UK and Germany remained top investment destinations, followed closely by the Nordics, where a significant surge in investment volumes took place. These three regions attracted nearly 60% of the capital invested in the European logistics market. The UK saw a y-o-y decrease in investment volumes, however, it continues to outperform other markets. For Germany it was the best mid-year result for logistics investments since 2008. Investors focused on high quality portfolio properties. Although France saw a drop in overall investment volumes in comparison with H1 2012, logistics investment recorded a significant increase (45%), with the vast majority of the capital coming from foreign investors. Also Central and Eastern Europe saw increased interest from investors, with the highest ever investment volume recorded in Russia. Many other markets saw a significant surge in industrial investment levels, including Italy, where two large portfolio transactions boosted investment volumes to a level not seen in this market since 2008. In terms of cross-border acquisitions, Norway and the US were the main sources of capital. Norges Bank Investment Management was the top buyer having invested (€1.2 billion) in European market, almost double of the total volume invested by the US buyers. Prices have been stable, with hardly any yield changes recorded. Market share in H1 2013 industrial investment volume 5% 22% 22% 5% UK Germany 12% Nordics 19% 14% CEE & Russia France Benelux 18% Italy Other SOURCE: RCA Current trends to continue With no dramatic changes in production and consumer spending levels expected this year, further stability of the industrial and logistics occupier market is anticipated. The uncertain economic environment and limited availability of new space mean that lease renegotiations will continue to dominate occupier activity in many markets. Pre-lease agreements and build to suit development will also continue to play a significant role in satisfying demand. INDUSTRIAL AND LOGISTICS | EUROPE 2 Industrial & Logistics Market Report | H1 2013 | EMEA COLLIERS INTERNATIONAL P. 5
  • 6. Top lease transactions H1 2013 STOCKHOLM MOSCOW IKEA 72,000 Univeg sqm Asda 55,740 Travis sqm Perkins Logistics 65,030 John Lewis sqm 62,700 AMSTERDAM sqm LONDON BRUSSELS FRANKFURT PARIS Samada 51,000 sqm 50,000 sqm Amazon 65,000 Castorama sqm 50,000 WARSAW sqm Fiege Logistik PRAGUE 95,000 sqm MUNICH Toys R Us 51,000 sqm Amazon 60,000 sqm MADRID Source: Colliers International Despite limited supply levels, rents are forecast to remain broadly flat. We can expect further increases in Riga and Vilnius, as well as in Amsterdam, Oslo, Birmingham, Kyiv and London Heathrow, while Lisbon, Rotterdam and Venlo might see some downward pressure. Interestingly, no fall in rents is expected this year in markets with the highest levels of under construction space; that is in Moscow, Istanbul, Prague and Minsk. Most of the space to be delivered is already leased or the new supply will fill the gap in those markets suffering from a significant lack of modern, high quality facilities. The retail sector will continue to drive demand, directly and indirectly, not only for large logistics space, but also for smaller premises suitable for parcel operators. In the second half of the year we will see the opening of Amazon’s three new distribution centres in Italy, Germany and France, with a total space of 215,000 sq m and Zalando’s new centre near Dusseldorf. Not only e-tailers, but traditional retailers introducing and developing their multi-channel sales will remain a constant driver for distribution space. Most of the retailers who have recently decided to expand or lease new premises admit they have decided to do so in order to improve management of their multi-channel sales. Further expansion of food retailers and third party logistics is also expected. INDUSTRIAL AND LOGISTICS | EUROPE Investment activity will continue to rise The relative stability of the logistics market and sound income returns ensure further investor interest in the sector. High investment activity is forecast to continue in Germany, with a number of large-volume sales expected to take place in the second half of the year. Other major Western European markets are also expected to perform well. Russia’s economic growth, sound retail sales and continuous strong demand for distribution space augur well for both occupiers and the investment market. As in other sectors, the shortage of prime assets secured with long term rental income remains one of the main impediments of investment activity. Prime warehouse yields have stabilized; some compression might be expected in Hamburg, Frankfurt and Venlo. With limited new supply planned to enter the European market, investment opportunities will continue to come mainly from investors disposing of their portfolios. Along with an increasing understanding of the online and multi-channel retail sector we might also see growing investor interest in properties such as large e-fulfilment centres, regional distribution centres and parcel sorting facilities, which so far have fallen outside investors’ primary focus. COLLIERS INTERNATIONAL P. 6
  • 7. What is the rent in (insert your market here)? EMEA Property App The only app available where you can view and compare current market indicators for the office, retail, industrial and logistics sectors across the EMEA region including: > Rents > Vacancy rates > Yields > Future trends > Available properties Available for download on smartphones and mobile devices through the App Store and Accelerating success. INDUSTRIAL AND LOGISTICS | EUROPE COLLIERS INTERNATIONAL P. 7
  • 9. Austria Market Highlights The outlook for the industrial and logistics real estate market in Austria is more than ever influenced by the general economic downturn. Expanding businesses, and those corporates that are consolidating following the financial crisis, are now only interested in properties which are ‘fit for purpose’ and flexible, have stateof-the-art amenities, and also occupy locations with good transport connections. Key requirements include an element of office space, up-to-date ramp systems, sufficient vehicle manoeuvring space, and ceiling heights of 8 to 12 metres for the logistics sector and 6 metres for commercial production. In addition to factors such as convenient employee and trade access, the proximity to the flow of goods and markets is also important; so too is an infrastructure which both caters sufficiently for businesses that need 24-hour facilities for trucks and offers adequately-sized (to accommodate EuroCombi type trailers) access routes to major highways. Rental costs for modern industrial properties are stable due to the lack of suitable properties on offer. Another prerequisite for the modern logistics sector, but also for industrial and commercial sectors, is the provision for third-party usage, which requires significantly higher building technical requirements that adhere to the current OIB building code guidelines, and also offer Green Building certification options MAJOR LOGISTICS CENTERS AND MARKET INDICATORS 2 # 1 Logistics Center Locations Prime Rent Warehouse Prime Rent Bulk Prime Yield 3 1 Vienna / Vienna Region €5.00 €4.90 8.50% 2 Linz / Central Upper Austria €4.70 €4.50 8.50% 3 4 Graz / Automotive Cluster €4.50 €4.50 9.00% €5.00 €5.50 8.75% 4 Salzburg Region Colliers International Goldschmiedgasse 10 1010 Wien Austria LUKAS RICHTER Head of Industrial and Logistics Department +43 1 535 53 05 26 INDUSTRIAL AND LOGISTICS | WESTERN EUROPE for environmental aspects, and Blue Building certification for management costs. Older production facilities that date from 1970-1990 do not meet these requirements and are becoming obsolete; sales of these properties are often simply calculated by subtracting the costs of demolition and removal from the land value. Rents for modern commercial properties are currently stable due to the lack of suitable properties on offer, but the rates are, of course, dependent on location, size, condition and use of the buildings. However, land prices in the Vienna region have generally undergone a further decline (depending on zoning status) due to the financial and economic crisis. There are still very limited financing options available for the development of industrial and commercial property, and this has translated into reduced development and completion rates, and added to the continued pressure on the recovering investment market. Yields for logistics and industrial properties are dependent on location, size, flexibility, lease lengths, and the creditworthiness of the tenant, as well as re-use possibilities, and currently lie between 8.50 and 9.50% (all risk yield). COLLIERS INTERNATIONAL P. 9
  • 10. Austria Wiener Neudorf Development Available Industrial & Logistics Park IZ Nö Süd , Vienna Region Ölhafen, 1220 Vienna This logistics scheme, situated in Wiener Neudorf in the south of Lower Austria, is being developed on a plot of 90,000 sq m. The current development plan comprises 45,000 sq m of modern warehouse space for contract logistics and cross-docking, as well as 3,000 sq m of integrated office space which can be extended if required. This industrial park is situated between Lobau oil port and Refinery Road and can be built in several sections using the existing infrastructure. In addition, there is workshop space, a truck-wash area, separate offices and laboratory areas, and all properties have supply and waste facilities. The existing railway connection also allows for full train dispatching. The property is set over approx. 110,000 sq m and includes 60,000 sq m of warehousing. Gewerbepark Marchtrenk Production and Logistic Site Welser Straße, 4614 Marchtrenk, Central Upper Austria 8262 Ilzin Styria 45 km northeast of Graz The property is on an excellent site next to the A25 motorway, with connections to the A1 (to Vienna and Munich), A9 (to Salzburg) and A8 (to Passau). It offers extensive production and warehousing areas for rent, and portions for sale from approx. 2,00017,000 sq m. The total property size is c. 125,000 sq m with 60,000 sq m of warehouse space. The 312,241 sq m property is an undeveloped industrial site adjoining the existing Magna Powertrain site. It can be divided from 10,000 sq m to approximately 200,000 sq m. The site is near the A2 motorway, at the Exit Ilz-Fürstenfeld, and will have a significantly improved connection with Hungary with the completion of the S7 motorway in 2016. This area is a growing location for industrial and commercial businesses with existing industrial sites on either side of the A2 motorway. The sale price is between €16 and €25 per sq m for the land. INDUSTRIAL AND LOGISTICS | WESTERN EUROPE COLLIERS INTERNATIONAL P. 10
  • 11. Belgium Market Highlights ECONOMY Worldwide economic uncertainty continues to have a negative effect on the Belgium industrial real estate market. Even so, the market has performed better than expected at the beginning of 2013, although the economic recovery remains fragile and, as a consequence, developers have shown little enthusiasm to start speculative schemes. Industrial production in Belgium is experiencing tough conditions due to the country’s high labour costs and the limited availability of expansion opportunities. However, expenditure levels among Belgian consumers continue to be high, and this has had a positive impact on the retail warehousing market. For 2013, Belgium’s GDP is expected to grow by 0.2%, while unemployment is projected to increase to 7.7%; inflation is forecast to reach 1.5%. Belgian consumer spending continues to be high. DEMAND/TAKE UP In 2012 the logistics market continued to recover. Total take-up was approx. 1,458,000 sq m, consisting mostly of small and medium sized deals. Larger logistical units (>10,000 sq m) accounted for approx. 634,000 sq m. The 2 1 MAJOR LOGISTICS CENTERS AND MARKET INDICATORS # Logistics Center Locations Prime Rent Warehouse Prime Rent Bulk Prime Yield 1 Brussels €4.17 €3.50 7.15% 2 Antwerp €3.80 €3.35 7.20% Flanders Region continues to be the focus of industrial and logistical activity, registering 80% of all transactions. ‘The Golden Triangle’ is still the most attractive area for occupiers. Colliers International De Keyserlei 5 b8 2018 Antwerpen Antwerp DEVELOPMENT Land values, for the moment, remain relatively stable. In Brussels and Antwerp, there are very few parcels of land available; however, more land is available in Wallonia and Limburg. Built-to-suit projects are becoming a stronger feature in logistics real estate, with the ongoing economic uncertainty driving developers towards more secure projects with stable tenancies. At the same time, occupiers are increasingly interested in new tailor-made buildings. DAVID DE CLERCQ Director | Industrial and Logistics +32 3 224 89 75 INDUSTRIAL AND LOGISTICS | WESTERN EUROPE COLLIERS INTERNATIONAL P. 11
  • 12. Belgium EPC Mondelez Toekomstlaan, Beerse, Antwerp Brusselsteenweg, Halle, Flemish Brabant Having acquired the exclusive assignment from Ravago Production for the sale of its former EPC production site, we achieved, within six months, a successful disposal of the entire estate. The property, set over some 31,000 sq m of land, comprises four industrial buildings with a total built area of approx. 15,000 sq m that includes warehouse, production and office space. The site was acquired by ABW BVBA, active in pavement works, for its own use. We advised Mondelez on the sale of approx. 13,000 sq m of industrial land which includes an older office building. The property was sold to Colim, part of Colruyt, a Belgian retailer. Aartselaar Business Estate Weg naar Zwartberg, Opglabbeek, Limburg Kontichsesteenweg, Aartselaar, Antwerp We advised on the letting of Unit 10 on this industrial complex to bpost. The lease consists of a 2,042 sq m warehouse, 288 sq m of offices and 120 parking places. INDUSTRIAL AND LOGISTICS | WESTERN EUROPE On behalf of Covidien, a global healthcare products leader, we negotiated a new lease at this property which includes an extended 6,000 sq m of warehousing. Total warehouse space now measures 35,000 sq m with an additional 2,000 sq m of office space. COLLIERS INTERNATIONAL P. 12
  • 13. France Market Highlights Both drivers of the French logistics market are currently challenged: Automotive, textile and manufacturing production are sharply declining, while national household consumption remains sluggish this year. French purchasing power and wages are indeed still under downward pressure and no tangible rebound in consumption is therefore to be expected in the short term. Demand for large-scale logistics buildings should increase over the next few years. Despite this depressed economic situation, the French logistics market proved rather resilient in H1 2013, with 800,000 sq m of take-up, reflecting a marginal decrease of 4% y/y. Amazon confirmed toward the end of 2012 their willingness to move in a 90,000 sq m new warehouse in the Nord-Pas-de-Calais region in northern France and this project, which was publically announced during the month of January 2013, is undeniably a key factor in the above-mentioned robust performance. French logistics take-up would reveal a much bigger decrease if this large-scale project were excluded from the H1 2013 take-up figure. In fact the slowdown in demand accelerated in Q2 in the regions. Typically, in Rhône-Alpes (near Lyon), take-up for large warehouses is suffering hard and none of the four transactions recorded in the first part of 2013 exceeded 25,000 sq m. 3 MAJOR LOGISTICS CENTERS AND MARKET INDICATORS # 1 Logistics Center Locations Prime Rent Warehouse Prime Rent Bulk Prime Yield 1 Paris (Ile- de France) 4 Colliers International 147 Boulevard Haussmann 75008 Paris - France €4.60 7.50% 2 Lyon (Rhona-Alpes) €5.00 €3.70 7.40% 3 2 €5.00 Lille (Nord Pasde Callais) €4.60 €3.75 8.00% 4 Marseille (Provence Alpes - Cote d' Azur) €5.00 €3.75 8.00% By contrast, several large transactions signed in the Paris area helped boost the national performance, such as two turnkey operations for TOYS R US and C&A, of 48,000 sq m and 32,000 sq m respectively in the Seine-et-Marne market (77). However, during H1 2013, Île-de-France accounted for only one third of the total French logistics leasing market, against the long-term annual average of 45%, highlighting a shift in the geographic breakdown of take-up this year. Chances for a rapid recovery of the French logistics market are thin in the current macro-economic environment. Total 2013 take-up should therefore be in line with the 2012 level, i.e., probably between 1.5 and 1.7 million sq m. SERGE MAGINEL Director of Industrial & Logistics + 33 (0) 1 56 88 94 79 INDUSTRIAL AND LOGISTICS | WESTERN EUROPE COLLIERS INTERNATIONAL P. 13
  • 14. France Sira Building Parc@robase Bois d’Arcy (78), West Paris Area Eragny sur Oise, North-West Paris Area PM2S is a subsidiary of the Fujifilm Group, a longstanding client that has used our advice to complete four property deals over of the last six years, moving into buildings with a total floorspace of around 10,000 sq m. This new building will house the group’s after-sales service for photographs. Weiss Technik France is a subsidiary of the German group, Weiss Umweltechnik, Europe’s largest manufacturer of industrial ovens and environmental and thermal chambers. In Q4 2013 it will move into a 3,000 sq m build-to-suit development with 1,000 sq m of offices situated in this new park, which, when complete, will boast 20,000 sq m of high-tech buildings. We advised the owner and Weiss Technik throughout the transaction. Collegien (77) Saint Germain les Arpajon The Aereco group, which employs 350 people worldwide including 180 in France, and is present in 10 countries including China, the USA, Russia and Germany, has contracted Salini Immobilier to build its new headquarters facility. It has taken 15 months to buy the land, select suppliers, obtain the necessary permits and start construction work on this 14,000 sq m development. We advised both parties on the deal. In March 2013 in the south of Paris, Saint Germain les Arpajon, Colliers-Keops sold a 16,025 sq m industrial building (ex cinema studio) to a car restorer and collector who will use part of the building for his own use and will lease the other part. East Paris Area INDUSTRIAL AND LOGISTICS | WESTERN EUROPE South Paris Area COLLIERS INTERNATIONAL P. 14
  • 15. Germany Market Highlights Demand for German logistics and industrial real estate remains high. A very strong Q1 was followed by a solid Q2, giving us the best mid-year result since 2008. A transaction volume of more than €1.1 billion signifies a year-on-year increase of 69% and a share of the entire market transaction volume at 8.5% above last year’s average. As we have come to expect, the market share for package sales and international investors is once again considerably higher than that of the commercial investment market in Germany. A total of around €438 million, or 40%, of invested capital went into logistics portfolios during the first six months of the year. During the same period of time, international investors made purchases totaling approx. €411 million, or a market share of 37%. Investor focus on high-quality portfolio properties. Between January and June, investments in portfolio properties made up the largest share (87%) of total transaction volume at around € 962 million. New buildings and project developments only recorded a transaction volume of around €145 million. This was primarily due to the low supply of new buildings and projects. However, there are a number of portfolio properties that meet the highest user demands and that were built relatively recently. The fact that these properties can usually be used by third parties and boast long-term lease agreements puts them in the highly coveted class-A property category. The current vigorous market development is going to continue. MAJOR LOGISTICS CENTERS AND MARKET INDICATORS 4 # Logistics Center Locations Prime Rent Warehouse Prime Rent Bulk Prime Yield 1 Colliers International Ulmenstr. 37-39 60325 Frankfurt PETER KUNZ FRICS Managing Partner Head of Industrial & Logistics +49 69 719192-23 INDUSTRIAL AND LOGISTICS | WESTERN EUROPE €5.50 6.90% €6.50 €5.90 6.70% €5.60 €6.20 7.20% 4 Hamburg €5.80 €5.80 7.20% 5 Düsseldorf €5.50 €4.00 7.25% 6 Berlin 3 €6.30 3 Stuttgart 2 1 Munich 2 Frankfurt 6 5 €5.70 €4.30 7.30% Prime products remain expensive. The current market situation shows that investors are still focusing on densely populated areas and established logistics locations. In the six cities surveyed, prime yields for prime logistics properties continued to remain at the low level that we have been seeing for some time. The most expensive locations continue to be Frankfurt am Main and Munich, each with top yields of 6.90%, followed by Hamburg and Stuttgart, each with 7.20%, Dusseldorf with 7.25% and Berlin with 7.30%. Outlook: Market activity to remain lively – €2 billion mark for transaction volume possible. As expected, German logistics and industrial properties were an attractive investment target for national and international investors in Q2 as well. We expect a number of large-volume sales on the market for value-added products in the coming months. Despite this trend, we’ll continue to see primarily security-driven demand, leading to continuing high prices and low yields. Since there are some medium-sized individual sales and a number of large-volume package sales in the pipeline, which are expected to be finalized in the second half of the year, we believe that the transaction volume in the second half of the year will be comparable to the one we saw in the first half. That would translate into an annual result of more than € 2 billion, which we find realistic. COLLIERS INTERNATIONAL P. 15
  • 16. Germany Pendulum, Farbtex III Campus Böblingen/NXP Herrenberg Böblingen Based on our market analysis over the last two years, we were able to optimise the letting contract with the current tenant in combination with an exit strategy for the owner. 11,650 sq m was leased by Farbtex Kaltenbach + Maier GmbH & Co. KG in October 2012 for a lease term of 10 years which then facilitated the sale of the complete 53,000 sq m logistics centre to Henderson Global Investors Ltd. Through the consultancy of our Stuttgart team, 62 acres was sold in February 2010 and has been leased on a long-term basis by the Willi Betz Group. In addition, six months later, we facilitated the sale of the development to DEKA Immobilien GmbH, Frankfurt. International Occupier Portfolio Prologis Park Köln-Eifeltor Aschheim, Dornach, Kirchheim Am Eifeltor 22, 5997 Köln Due to the expansion of its e-commerce business and storage insourcing, a Munich-based international textile retailer needed to develop a new logistics concept in immediate proximity to its existing location. In the course of 2.5 years, we facilitated the lease of approximately 24,500 sq m of new and consolidated space. In some cases, contracts with a lease term of 10 years were concluded. The total value of the lease contracts was over €8 million. Cologne, a requirement which eventually grew to 18,000 sq m. We were able to secure a lease for Objectflor in the Prologis scheme, one of the largest contiguous areas for logistics in Cologne. INDUSTRIAL AND LOGISTICS | WESTERN EUROPE COLLIERS INTERNATIONAL P. 16
  • 17. Ireland Market Highlights Take up for the first six months of 2013 equated to approximately 120,000 sq m, up approximately 20% from the same period last year. The vacancy rate remains unchanged and currently stands at 21% in the Greater Dublin area. Most Dublin activity is in the south west (45%) with the north east and north west accounting for a further 25% of take up each. Purchase prices for prime stock are in the region of €600 per sq m and in most cases well below reinstatement costs. Approximately 40% of deals are made up of sales, up on previous years, and the majority of these sales are cash purchases. We expect a number of new facilities to come on the market (through receivers) in the coming months keeping the vacancy rate high. There has been no speculative development for years and we don’t see this changing in the short term. The majority of rental deals comprise short term leases (3 years or longer with breaks) and there is evidence emerging that prime rents for modern facilities in excess of 5,000 sq m have increased somewhat due to a scarcity of this product. Prime (Dublin) rents now stand at €60 per sq m with secondary rents €40 per sq m and tertiary rents €30 per sq m per annum. The regional markets (Galway/ Cork/ Limerick) continue to struggle with limited demand but they are showing some signs of stabilisation. MAJOR LOGISTICS CENTERS AND MARKET INDICATORS 1 # Logistics Center Locations 1 Dublin Colliers International Hambleden House, 19–26 Lower Pembroke Street, Dublin 2 Ireland PAUL FINUCANE Associate Director +353 1 633 3724 INDUSTRIAL AND LOGISTICS | WESTERN EUROPE Prime Rent Warehouse ¤5.00 Prime Rent Bulk ¤4.58 Prime Yield 8.50% Finally it is worth mentioning that Ireland is now the fastest growing country in Europe for Data Centre operators. Google have now invested €75 million at Profile Park and Microsoft have just applied for planning permission for another €500 million facility in the same area. Unit 4 Horizon Logistics Park Dublin Airport Kintetsu Worldwide Express (KWE) appointed us to renegotiate its existing and onerous long-term lease. We were able to negotiate a 35% reduction in rent, a flexible new lease term with a five-year break clause for KWE and the removal of a reinstatement liability at lease expiry, as well as an upward-only rent review clause. COLLIERS INTERNATIONAL P. 17
  • 18. Get Connected For the latest market research and trends on a global, regional and local basis, visit INDUSTRIAL AND LOGISTICS | EUROPE COLLIERS INTERNATIONAL P. 18
  • 19. Netherlands Market Highlights The Dutch logistics real estate market is, overall, quite stable, however there are slight regional variations which are historically typical and to be expected. For instance, the cities in the south of the Netherlands are generally performing well; rents for logistics properties in the province of Noord-Brabant have increased while yields have improved. The main reasons for this growth are the growing demand for industrial space from the e-commerce sector and the availability of skilled employees in the region. For the next 12 months this trend is expected to continue in Noord-Brabant. The Dutch continue to have a pioneering role in international cargo flows. By contrast, rents and yields have been in reverse in Venlo; the city seems to be losing ground to cities such as Eindhoven and Tilburg who are more successfully meeting the growing demand for logistic space. Another notable trend is the decrease of rental prices in Rotterdam due to an expansion of supply. At Amsterdam Schiphol Airport there has also been an increase in supply but this has actually led to an increase in rents; the difference can be explained by the open market in Rotterdam and the airport-bound market in Schiphol. In general, there is limited market volatility, primarily a result of the passive attitude of investors, developers and occupiers. Developers remain subdued and are awaiting build-to-suit assignments, while occupiers are holding on decisions MAJOR LOGISTICS CENTERS AND MARKET INDICATORS # Logistics Center Locations Prime Rent Bulk Prime Yield 1 Rotterdam (port) Colliers International Buitenveldertselaan 5, 1082 VA, Amsterdam MARC WOLTHUIS Director of Corporate Solutions +31 (0) 20 540 55 50 INDUSTRIAL AND LOGISTICS | WESTERN EUROPE €3.83 7.50% 4 Tilburg 3 7.00% €3.42 7.5% 5 Eindhoven €4.58 7.50% €4.50 7.50% 7 Bergen op Zoom 4 5 €7.33 6 Amsterdam (port) 7 7.00% 3 Venlo 1 €4.08 2 Amsterdam (airport) 2 6 €3.75 7.50% regarding any relocations and only moving when absolute necessary. This has resulted in a limited availability of Class A warehouses. Other trends in the logistics market are an increase in the demand for large logistic buildings, driven by both the expansion of e-commerce and the broader industry consolidation of locations. With the increasing demands of e-commerce, it is noteworthy that the south of the Netherlands is currently withstanding heavy rivalry from Belgium, the German Ruhr area and the north of France. We have also identified a growing trend among manufacturers to undertake their own warehouse activities or to take-up logistics spaces themselves by contracting logistic suppliers on a short-term basis to execute their warehouse activities. From a logistics perspective, the Dutch continue to have a pioneering role in international cargo flows. Major import and export hubs such as Rotterdam and Schiphol are key in Western Europe, while cities in the south of the Netherlands are important hubs for international road cargo. COLLIERS INTERNATIONAL P. 19
  • 20. Netherlands HAVI Logistics Lekkerland Amersfoort Eindhoven Area We were appointed by HAVI Logistics to advise in a sale and leaseback transaction for its Dutch headquarters. Based on a site inspection and a valuation, we advised HAVI against the sale and leaseback. As a result, we were appointed on the sale of eight warehouses through Continental Europe. We provided an extensive ‘stay or move’ analysis for convenience goods company, Lekkerland. The analysis covered five mixed-use warehouses throughout the Netherlands comprising a total area of 70,000 sq m. Ferro Holland Bally Technologies Rotterdam Amsterdam Area We have sold the former enamel factory of Ferro (Holland) BV, a subsidiary of the US-based Ferro Corporation. The site included a gasholder of 3,500 sq m, Ferro’s former factory of 6,400 sq m and 6,000 sq m of office space. The total plot size was 33,460 sq m. We were appointed by owner Altera Vastgoed to lease an entire renovated industrial space at Schipholweg 321 in Badhovedorp, near Schiphol airport. The complex consists of a total of 3,750 sq m. Colliers leased 2,500 sq m to games designer Bally Technologies. American company, GSM systems, occupies the remaining space. INDUSTRIAL AND LOGISTICS | WESTERN EUROPE COLLIERS INTERNATIONAL P. 20
  • 21. Spain Market Highlights The Spanish industrial and logistics real estate market during 2012 has felt the effects of the economic and financial crisis. Investment volumes and transactions number have fallen significantly, while the general downward pressure on rents remains. However, certain sub-markets are finding a degree of stability i.e. prime located and specified units over 20,000 sq m. The decrease in consumer spending has led to a logical decline in retail demand and, in turn, reduced the demands for space from industrial and logistics operators. Financial constraints have determined a lack of investment activity from small and medium companies who, traditionally, have sought opportunities for owner occupation. SUPPLY Liquidity constraints have resulted in the closure and decline of many Spanish developers, and speculative projects have virtually disappeared; any new developments are exercised purely on a turnkey basis (e.g., H&M). Marketing activities are increasing for investments, vacant possessions and leasing, and with them there are increasing range of incentives such as option to purchase and longer rent-free periods; however, fit-out work is not usual, due to the lack of finance. The current yield trend is stable (8.00-8.25%) for good product located in consolidated areas. RENTS Rents for logistics space continue to decrease in all sectors, albeit not as sharply as previous quarters. This trend is being exacerbated in secondary locations MAJOR LOGISTICS CENTERS AND MARKET INDICATORS 4 1 2 # Logistics Center Locations Prime Rent Warehouse Prime Rent Bulk Prime Yield 1 Madrid €3.00 €4.80 8.25% 2 Barcelona €3.50 €6.00 8.00% 3 Valencia €2.25 €3.25 9.25% 4 Zaragoza 3 €2.50 €3.30 9.00% due to high levels of obsolete and vacant stock. Rental levels in Madrid and Barcelona have been adjusted by approximately 15 to 20% in prime sub markets; in secondary locations the figure is 25 to 35%, and even more in areas with both dated stock and high vacancy levels. INVESTMENT Colliers International C/Velázquez 94 5º- Derecha 28006- Madrid (Spain) NEIL LIVINGSTONE Managing Director +00 34 91 436 09 25 During the last 12 months the investment market has registered very few transactions due to the imbalance between supply and demand. The majority of product on the market does not respond to investors’ expectations in terms of yield and security of rental income. In seeking product that has in excess of 10 year’s income, investors are demanding high-quality assets with an intrinsic real estate value (for re-letting purposes) that are located along the main logistics and industrial zones, with long-term lease contracts and yield levels that reflect the country risk. In addition, they are also looking rental guarantees: between 6 and 18 months of rent. There is now a clear movement towards tiering/market division; Madrid and Barcelona is the principal focus and within those markets there are very clear investments boundaries. Prime yields are witnessing a slight stabilisation, with standing prime yields at 8.00-8.25% for good quality product located in consolidated areas of Madrid and Barcelona; however, this product is scarce. INDUSTRIAL AND LOGISTICS | WESTERN EUROPE COLLIERS INTERNATIONAL P. 21
  • 22. Spain Eroski Logistics Premises - Zaragoza Eroski Logistics Premises - Málaga Logistics Platform of Zaragoza (PlaZa) Mercamálaga - Málaga We were appointed, on behalf of Eroski, to market and dispose of its 28,882 sq m logistics warehouse unit, which was successfully sold to Deka Immobilien Investment GmbH for €17 million. Acting on behalf of Eroski, we were instructed to sell this 35,055 sq m logistics warehouse unit. After conducting a full marketing campaign, the site was successfully sold to a Spanish family office for €25 million. Gazeley Logistics Units Dura Automotive Dehesa de la Plata, Ontígola, Toledo Arazuri-Orcoyen Industrial Park, Pamplona (Navarra) We undertook a comprehensive market analysis and provided investment advice to Gazeley, which resulted in the marketing of its logistics units located in Ontígola. The opportunity for the buyer was provided through a secure long-term lease contract with an established third-party logistics provider, and the property was successfully sold to GLL Real Estate Partners for €28.5 million. We were appointed to sell the Dura automotive industrial warehouse that was previously owner-occupied. After conducting a detailed strategy for alternative uses and a full marketing campaign, the industrial premises were sold to Nasuinsa, a public company that manages and promotes industrial land in the Province of Navarra, for €6.8 million. INDUSTRIAL AND LOGISTICS | WESTERN EUROPE COLLIERS INTERNATIONAL P. 22
  • 23. UK Market Highlights Overall industrial take-up across the UK fell by 6% year on year in 2012 but in 2013 to date, encouraged by improving economic conditions, appetite has improved steadily. An increase in the levels of demand for D&B big sheds has driven transactional activity and encouraged the first signs of speculative development in the South East and Midlands markets. Availability continues to fall across all regions. Based on average take-up levels over the past decade, total availability of new / refurbished space represents less than 1.5 years of supply across the UK as a whole. Renewed confidence in the economy has led to increased activity in the industrial and logistics market, particularly among food retailers and online commerce companies. Manufacturing performance is much improved, but related more to an increase in domestic spending than to export growth. Exports though have also improved with non-EU exports exceeding EU exports in four of the last five quarters. Emerging market turbulence may impact negatively, but stronger recovery in the advanced economies will compensate. The South East has seen supply for 200,000 sq ft plus units dissolve to a trickle, with those potential occupiers that are in the market finding it difficult to secure an existing site that meets requirements. In all but a few instances, a pre-commitment to a future scheme is the only way to guarantee the right product. Multi-let demand has remained steady although deals remain at the mercy of being referred back to company boardrooms for scrutiny. MAJOR LOGISTICS CENTRES AND MARKET INDICATORS Logistics Centre # Locations Prime Rent Warehouse Prime Rent Bulk Prime Yield 1 London (Heathrow) 2 50 George Street London W1U 7GA United Kingdom LEN ROSSO Head of Industrial and Logistics +44 20 7487 1765 ¤7.40 7.50% ¤6.10 ¤5.80 7.50% ¤6.10 ¤4.80 7.50% 5 Leeds Colliers International ¤7.40 3 Birmingham 1 6.00% ¤5.80 ¤5.30 8.00% 6 Glasgow ¤6.30 ¤5.30 7.75% 7 Edinburgh 3 ¤15.30 2 Bristol 4 5 ¤14.30 4 Manchester 6 7 ¤7.40 ¤4.80 7.75% While the mismatch between supply and demand is only likely to become more pronounced during 2013/14 with so little new space coming to market, funding constraints remain with continuing difficulties for developers seeking to make the base numbers stack up. Nevertheless, speculative development is certainly back on the agenda, albeit modestly compared to pre-credit crunch and ten year average levels. With the growth in demand for multi-channel and e-tail oriented warehouses and distribution centres, there is a significant incentive for landlords to redevelop their secondary stock to meet this demand. However, it is a catch 22 scenario because this specialist demand is remaining untapped due to developers lack of access to finance and the banks reluctance to lend the required capital. Broadly, rents still remain static across the country with the exception the Midlands and West London which have shown resilience, aided by constrained supply in key size bands. The strengthening economic outlook is allowing traction in the key sectors of construction and also manufacturing. Rapid improvement in economic conditions and lack of good quality stock suggests that recent stabilisation in rents should become more widely entrenched. INDUSTRIAL AND LOGISTICS | WESTERN EUROPE COLLIERS INTERNATIONAL P. 23
  • 24. UK Holford Drive G Park Birmingham Manchester We were appointed to identify a building with lots of power in close proximity to our client, Timet’s existing facility and offices. After conducting a thorough search we acquired 96,500 sq ft with circa 30% office content in the neighbouring industrial estate for our client. We provided a comprehensive market analysis and investment advice to Gazeley which resulted in the marketing of the investment at a 7.5% yield, reflecting an £18 million lot size. 10 McNeil Drive Axis Park Eurocentral, Glasgow Heathrow Appointed to secure the WM Morrison Supermarket lease of 100,000 sq ft of modern warehouse beyond the imminent break date in the hope of a longer term commitment. Following negotiations, Colliers successfully extended the tenant’s lease without a reduction in the passing rental thus providing our clients with certainty and longer term secure income from a strong Plc covenant. We were appointed to dispose of Allport’s existing lease for a 65,000 sq ft warehouse on Axis Park via assignment or sub-lease. Following an aggressive marketing campaign, we secured Royal Mail to take a sub-lease of the premises until the expiry of the lease. INDUSTRIAL AND LOGISTICS | EUROPE COLLIERS INTERNATIONAL P. 24
  • 26. Belarus Market Highlights Thirteen new warehouse complexes comprising some 140,000 sq m were launched in the Minsk Region in 2012, and a total of 48 projects are currently under development throughout the country. Despite the significant amount of new product coming on line, we do not expect the market to be oversaturated, as there is a large degree of pent-up demand; any new supply being released onto the market is generally being absorbed within three months. Logistics companies are overtaking food product distributors as the most active tenants in a market where rental rates are expected to remain at a very high level; vacancy rates are projected to be largely unchanged. In 2013, we forecast a moderate growth in supply as a result of the launch of new developments, and expect to witness the completion of the first buildings in the new large logistics parks currently under construction. Build-to-suit development activity will continue to be strong. The current level of rental rates will remain unchanged. Looking ahead, we also anticipate expanded demand for services provided by customs warehouses and terminals, including demand from non- Belarus residents, stimulated by the activity of the customs unions of Russia, Belarus and Kazakhstan. We predict an increase in development projects to meet the needs of logistics company subsidiaries as well as logistics companies that are affiliated with developers. The current level of rental rates is expected to remain unchanged. MAJOR LOGISTICS CENTERS AND MARKET INDICATORS 1 # Logistics Center Locations 1 Minsk Prime Rent Warehouse ¤10.50 Prime Rent Bulk ¤8.00 Prime Yield 13.00% Colliers International 20, 1st Zagorodnyj alley 7 floor, Minsk, Belarus, 220073 ALEKSEI DESIUKEVICH Consultant +375 172 569 569 INDUSTRIAL AND LOGISTICS | CENTRAL AND EASTERN EUROPE COLLIERS INTERNATIONAL P. 26
  • 27. Belarus BelVinges Logistic Minsk Warehouse Near Rakov, Minsk Region, Belarus 11A, Radialnaya Street, Minsk, Belarus We were appointed on behalf of BelVingesLogistic to dispose of 5,000 sq m of their 16,300 sq m new warehouse. We successfully leased the unit to Alidi, P&G’s Belarus distributor while the rest of the premises were occupied by the owner. We leased 2,624 sq m to Alivaria brewing company Alivaria, owned by the Carlsberg group. Alivaria Warehouse Complex Trade and Logistics Centre Dubaulyani, Minsk Region, Belarus Schomyslitsa, Minsk Region, Belarus We provided a comprehensive market analysis and advice to brewing company Alivaria (owned by the Carlsberg group) that resulted in closing built-to-suit-to-lease deal with the developer 7Holmov for the construction of the warehouse complex with 6,000 sq m gross leasable area. We were appointed to lease the first phase of this complex near Schomyslitsa consisting of four 5,000 sq m units. We leased two of the units to Capital Logistic Company, one unit to Megatop shoe retailer and the final unit was occupied by the owner and several small tenants. INDUSTRIAL AND LOGISTICS | CENTRAL AND EASTERN EUROPE COLLIERS INTERNATIONAL P. 27
  • 28. Czech Republic Market Highlights The total stock of modern industrial properties in the Czech Republic stood at 4.29 million sq m at the end of Q2 2013 with over 1.7 million sq m located within the Prague market. More than 214,000 sq m of warehouse space was under construction in June 2013 with 95% already pre-let and all buildings scheduled for completion by the end of 2013. Since the end of 2012, the national vacancy rate has increased slightly and in June 2013 stood at 8.65%; the rate has also grown in the Prague area to a level of 10.4%, representing nearly 150,000 sq m of immediately available industrial space. The Czech market currently offers good availability of units below 10,000 sq m in size. Demand for larger premises is typically for ‘design & build’ (builtto-let) premises, and such properties also provide solutions in submarkets where there is no available space or where the vacant premises do not meet the required specifications. Speculative development of warehouses and production premises for lease remains limited and, on the whole, is still only built as part of a pre-let and/or is completed to a ‘shell & core’ stage from where it takes around three to four months to finalise before the tenant can take full occupation. Most industrial developers in the Czech Republic own land for future development and have all the necessary permits enabling them to start construction immediately after contract signature. In such cases, the construction takes between six to nine months until full handover to the occupier, but lease contracts for a minimum five years are usually required. Leasing activity has been generated primarily by companies operating in the automotive sector. With its location in the heart of Europe, good highway network and skilled labour force, the Czech Republic remains popular for manufacturing companies MAJOR LOGISTICS CENTERS AND MARKET INDICATORS 5 # 1 Logistics Center Locations Prime Rent Warehouse Prime Rent Bulk Prime Yield Colliers International Slovansky Dum, Building B/C Na Prikope 859/22 Prague 1, 110 00 ROBERT BOCKER Head of Industrial +420 734 611 277 INDUSTRIAL AND LOGISTICS | CENTRAL AND EASTERN EUROPE €3.90 8.25% 2 Brno €4.20 €4.15 9.50% €3.70 €3.60 10.00% €4.20 €3.80 11.00% 5 Mlada Boleslav 2 €4.10 4 Ostrava 4 1 Prague 3 Pilsen 3 €4.00 €3.90 10.00% who continue to drive the demand for modern industrial premises. Lately, a significant part of the leasing activity has been generated by companies operating in the automotive sector who are primarily seeking space in the areas of Mlada Boleslav, Pilsen or Ostrava. A considerable level of demand is also being created by the electronics sector, especially in areas such as Brno and Pardubice, and by 3PLs and distribution companies who continue to explore options across the country depending on proximity to their clients. In 2012, total leasing activity (including contract renewals) reached almost 908,000 sq m with new demand (excluding renewals) representing 65%. Total activity in H1 2013 exceeded 457,000 sq m which is a 20% increase compared to the same period last year, but in line with the average quarterly leasing levels. Contract renegotiations accounted for 45% of the H1 2013 activity levels and are likely to continue to form a significant part of future totals. COLLIERS INTERNATIONAL P. 28
  • 29. Czech Republic Panattoni Pilsen Park West CTPark Bor Uherce, Pilsen District Nova Hospoda, Tachov District We represented Faurecia, a corporate client, in securing a new production plant near Pilsen in the west of the Czech Republic. Panattoni was selected as the winner of the tender and the premises were completed and handed over already. We assisted Rieter (now known as Autoneum) in its search for a new production facility in Western Bohemia. The existing premises at CTPark Bor were selected as the best option. We negotiated competitive lease terms and secured an expansion option which was exercised a few months later, bringing Autoneum to occupy a total of 12,500 sq m. PointPark Prague D1 CTPark Brno Strancice, Prague-East District Brno, South Moravia We were exclusively appointed by logistics operator, PST CLC, who was seeking an optimal solution for its expansion. PST CLC selected this scheme due to the flexibility of the landlord and the availability of existing space totalling 13,300 sq m, which was needed to accommodate the requirements of its new client, Barum Continental. We undertook a comprehensive search to find space for ModusLink’s expansion. An immediate solution was found within CTPark Brno where the company was already based, so we produced a strategy to reduce Moduslink’s occupational cost. We led negotiations with the landlord and achieved a 5% rent decrease for half of the client’s premises. INDUSTRIAL AND LOGISTICS | CENTRAL AND EASTERN EUROPE COLLIERS INTERNATIONAL P. 29
  • 30. Hungary Market Highlights 2012 showed weak overall activity in the industrial and logistics market in Budapest, with transactions mainly being renegotiations and lease extensions. However, increased supply and demand activity was recorded in the national market outside the capital, primarily driven by manufacturing companies. Increased supply and demand activity was recorded in the national market outside Budapest, primarily driven by manufacturing companies. Total stock levels remained stable at only slightly over 1.8 million sq m, as a result of only 16,500 sq m of new buildings being delivered to the Budapest market during 2012. New demand amounted to nearly 130,000 sq m, of which more than half was accounted for by new contracts, and the rest by expansions. Lease renegotiations totalled 226,000 sq m - a definite sign of a slow market recovery and passive market conditions. Small and medium-sized end-users and manufacturing companies are driving the demand side of the market. The vacancy rate decreased from the typical 20-22% to below the 20% level (19.4%), however this still equates to 350,000 sq m of available space. It is important to note that the Hungarian market is characterised by highly-fragmented available space, both geographically and also in 1 MAJOR LOGISTICS CENTERS AND MARKET INDICATORS # Logistics Center Locations 1 Budapest Colliers International MOM Park – Gellért torony Csörsz u. 41. H-1124 Budapest TAMAS BECK Director +36 1 336 4233 INDUSTRIAL AND LOGISTICS | CENTRAL AND EASTERN EUROPE Prime Rent Warehouse ¤4.25 Prime Rent Bulk ¤3.50 Prime Yield 9.00% terms of size. Larger contiguous areas (over 10,000 sq m) can barely be found. While rents are stable at low levels, it is still rare to find attractive pricing on the sales market. It is noteworthy that market activity has slightly increased in the regional markets, mainly as a result of the financial crisis which has added a number of Class A, mainly manufacturing, properties to the supply side. On the other hand, some ‘rebounding’ has been evident on the demand side, with manufacturing companies being more interested in leasing transactions, rather than their owning developments, and bank leasing services no longer dominate. The decreasing availability of finance and financial leasing constructions may result in a narrowing of the growth in demand for rental transactions in regional areas. COLLIERS INTERNATIONAL P. 30
  • 31. Hungary WestLog DC Viktória Park Biatorbágy Üllő In an exclusive landlord representation mandate that has existed since 2008, we have acted for Industrial Securities on the marketing and leasing of its WestLog Distribution Centre project. DHL signed a lease for an 11,380 sq m warehouse in 2012. Viktoria Park is an exclusive landlord representation mandate from REM that we have retained since 2008. French retailer Auchan signed a lease for 18,000 sq m at this prime logistics facility in 2009, which it expanded by an additional 15,000 sq m in 2012. Pharma Park ÁTI-Sziget Budaörs Szigetszentmiklós We have represented six international pharmaceutical firms - Cemelog, Bayer, Novartis, Lilly, Schering and Kéri Pharma - plus a pharmaceutical logistics provider in its warehouse relocation process, in renegotiating leases on some 30,000 sq m of space. We represented the landlord, Investor Holding, in a 24,500 sq m lease for the household equipment manufacturer, Nilfisk Advance. INDUSTRIAL AND LOGISTICS | CENTRAL AND EASTERN EUROPE COLLIERS INTERNATIONAL P. 31
  • 32. Poland Market Highlights The first six months of 2013 proved that Polish industrial and logistic market remains in good and stable condition. The first half of the year was satisfactory in terms of modern warehouse space supply as well as transaction volume. The total stock of modern warehouse space in Poland amounts to 7.55 million sq m, while the vacancy rate amounted to 10.5% at the end of June 2013. There are nine major industrial markets in Poland, the largest of which is Warsaw (divided into three zones), where the supply of modern warehouse space amounts to 2.6 million sq m. The second largest market is Upper Silesia with current supply estimated at 1.45 million sq m, which is then followed by Central Poland (more than 1 million sq m of modern warehouse space). The Polish industrial market is witnessing an increase in demand for modern warehouse space. Since the beginning of 2013, the demand for warehouse space in Poland showed an upward trend and in the first two quarters the transaction volume reached 870,000 sq m, more than half of which was noted in Q2. New agreements dominated the market and constituted 59% of all signed deals. It is also worth mentioning that BTS agreements still continue to be popular among Polish tenants and there are not many speculatively built projects. Rental rates for warehouse space in Poland remains stable. A slight upward trend can only be observed in regions where vacancy rates have decreased. 9 11 MAJOR LOGISTICS CENTERS AND MARKET INDICATORS # 10 3 2 1 Logistics Center Locations Prime Rent Warehouse Prime Rent Bulk Prime Yield 8 Colliers International Pl. Piłsudskiego 3, 4th floor 00-078 Warsaw Poland 7.75% N/A 2 Warsaw Zone II €3.00 €2.50 8.50% N/A €2.70 €2.40 8.75% N/A 4 Central Poland €3.10 €3.00 8.25% N/A €3.30 €3.20 8.25% N/A €3.40 €3.00 8.25% N/A 7 Wrocław €3.60 €3.10 8.25% N/A 8 Kraków €3.80 €3.40 8.25% N/A 9 Gdańsk €3.40 €3.30 8.25% N/A 10 Toruń/Bydgoszcz €3.10 €2.60 N/A N/A 11 Szczecin 6 €4.30 6 Upper Silesia 7 €4.80 5 Poznań 4 1 Warsaw Zone I 3 Warsaw Zone III 5 €3.30 €2.80 N/A N/A MACIEJ CHMIELEWSKI Partner +48 600 828 337 The Polish market is invariably dominated by a few large developers who own almost 70% of the market, in particular Prologis, Panattoni and SEGRO. TOMASZ KASPEROWICZ There are no significant changes predicted to take place in the Polish industrial and logistic market in the near future. Continued growing interest in regions, such as Upper Silesia, Wrocław and Poznań is expected. The dynamic development of the e-commerce sector will continue to drive the demand for modern industrial space. Partner +48 601 209 367 INDUSTRIAL AND LOGISTICS | CENTRAL AND EASTERN EUROPE COLLIERS INTERNATIONAL P. 32
  • 33. Poland PepsiCo Castorama - Built to Suit Various Cities in Poland Stryków PepsiCo has selected us as its exclusive agent to sell/lease a portfolio of six industrial properties located in Poland’s six largest cities. The total leasable area comprises over 28,000 sq m and every building is strategically located, in close proximity to primary access routes in and out of each city. We have been appointed by Castorama as their exclusive agent to negotiate their new BTS contract of 50,000 sq m in Stryków. The facility will be one of the largest in the market and will be used by its tenant as a modern logistics centre, with a warehouse section accounting for as much as approx. 49,220 sq m adapted for the purposes of effectively managing supplies from various sources. The remaining section of more than 780 sq m will serve as modern office space. Inter Cars - Built to Suit EKO Holding Sosnowiec Prologis Park Wrocław V We negotiated on behalf of logistics company ILS, a subsidiary of Inter Cars SA a BTS Project in Sosnowiec, Upper Silesia Region. The new facility will be tailored to ILS’ specific requirements and used for the warehousing and distribution of automotive spare parts for Inter Cars. It will comprise a 24,844 sq m warehouse and 1,000 sq m of office area. On behalf of trade group EKO Holding Colliers negotiated their new lease agreement on a BTS Project in Wrocław. The new 34,900 sq m build-to-suit distribution centre will be located in Prologis Park Wroclaw V. INDUSTRIAL AND LOGISTICS | CENTRAL AND EASTERN EUROPE COLLIERS INTERNATIONAL P. 33
  • 34. Romania Market Highlights Without any new deliveries registered during the first half of the year, as of June 2013, the market consists of 941,000 sq m of warehouse stock in Bucharest and 654,000 sq m additional spaces in the countryside. Registering a growth of 13% compared to the 2012 year’s results, Bucharest net take-up stood at 25,700 sq m in H1 2013, causing a further adjustment in the vacancy rate, which dropped to 11.7% at the end of June 2013. The transactions closed in the countryside accounted for 22,000 sq m in total. Out of these, 13,000 sq m built up the net take-up. The transactions were concentrated in Brasov, Ploiesti and Timisoara. The industrial market has witnessed a considerable increase in market dynamics. Rents remain stable. In our opinion, headline rents hit ‘bottom’ at the end of 2012 and are already more closely aligned with the current market’s performance. Thus, we do not expect further negative adjustments, even if some landlords with high vacancies might still remain flexible on rent negotiations. In 2013, demand is forecast to be driven by existing players, as we do not expect new companies to enter the logistic markets in the immediate future. MAJOR LOGISTICS CENTERS AND MARKET INDICATORS # 6 Logistics Center Locations Prime Rent Warehouse Prime Rent Bulk Prime Yield 1 Bucharest 2 Timisoara 5 1 Colliers International 169A Calea Floreasca Building A, 7th floor Bucharest1, 014459 €3.60 €3.30 10.50% 3 Arad €3.50 €3.20 11.00% 4 Brasov €3.80 €3.70 11.00% €3.80 €3.50 10.50% €3.50 €3.20 10.50% 7 Sibiu 4 10.00% 6 Cluj 2 7 €3.50 5 Ploiesti 3 €3.80 €3.60 €3.30 11.00% However, after a modest 2012, we do anticipate that transaction activity will gain momentum in 2013. In part this will be a result of some 300,000–400,000 sq m of lease contracts signed in 2007–2008 in Bucharest reaching maturity in 2013; the relevant tenants will have to consider whether to renew or to relocate to other projects. Moreover, while headline rents still remain relatively attractive, we might see an increase in demand from companies that currently lease space in lower-quality facilities (Class B or unconventional spaces). We also expect to see logistics companies expanding their leased areas they gain further contracts. VIOREL OPAIT Director +40 21 319 77 77 INDUSTRIAL AND LOGISTICS | CENTRAL AND EASTERN EUROPE COLLIERS INTERNATIONAL P. 34
  • 35. Romania Prologis Park Bucharest A1 Bucharest West A1 Highway, km 23 exit A1 Highway, km 13 exit This logistics park is Prologis’s first project in Romania. Located 22 km west of Bucharest and with direct access from A1 motorway, the high-quality scheme is host to some of the largest logistics operators active in the Romanian industrial market. This prime industrial location stands out for the diversity of its build-to-suit projects. It offers direct access to the A1 Highway and its high visibility provides an outstanding location for a wide range of light industrial and logistics occupiers. Attractive rents and land offers have stimulated increased interest for new investments in the area. ING Deva Europolis Logistic Park Deva, Depozitelor st. A1 Highway, km 13 exit Located on the future highway that will connect Sibiu and Timisoara, and in proximity to the newlyannounced Daimler investment in Romania, industrial activity in Deva is expected to experience a significant expansion. This 20,000 sq m warehouse is suitable for both logistics and light-production operations. This is an established logistics destination and hosts some of the major logistics operators present in Romania. Modern technical specifications and a railway link are some of the highlights of the project. INDUSTRIAL AND LOGISTICS | CENTRAL AND EASTERN EUROPE COLLIERS INTERNATIONAL P. 35
  • 36. Russia Market Highlights Industrial completions during Q2 2013 were approximately 230,000 sq m in the Moscow region. Combined with first quarter completions, the first half of 2013 was 16% higher (at 390,000 sq m) than the first half of 2013. H1 2013 also was marked by an increase in demand for industrial premises. Take-up during this period was 12% higher than H1 2012 or about 600,000 sq m. Due to a shortage of completed industrial premises, demand has shifted to properties under construction and built-to-suit projects. The total volume of such transactions increased 2.5 times over H1 2012. Rental rates for Grade A industrial space may grow up to $140-145 sq m/year by the end of 2013. The lack of quality industrial premises was felt in all areas of the Moscow region. Vacancy rates did not exceed 1%, even in the South-West, South-East and the South regions, which had the major completions, the vacancy rate were 0.3%, 0.1% and 0.5% respectively. Similarly, the vacancy rate did not exceed 0.5% in the distribution radius from MKAD. The average asking rental rates for Grade A industrial premises range between $135-140 per sq m per year, excluding VAT and operating expenses, and for Grade B premises the range was between $120-125 per sq m per year. MAJOR LOGISTICS CENTERS AND MARKET INDICATORS # Logistics Center Locations Prime Rent Warehouse Prime Rent Bulk Prime Yield 1 Moscow 1 Colliers International 5 Botanicheskiy Lane, Moscow 129090 Russia VLADISLAV RYABOV Partner, Regional Director, Warehouse, Land and Industrial +7 903 564 54 77 INDUSTRIAL AND LOGISTICS | CENTRAL AND EASTERN EUROPE $11.67 or €8.90 $11.33 or €8.70 11.00% 2 St. Petersburg 2 $10.40 or €8.50 $9.80 or €7.50 12.00% The industrial pipeline for H2 2013 is approximately 600,000 sq m. Thus, the total 2013 completions may reach 900,000 sq m, 1.4 times more than in 2012 and 2008 -2009, when industrial completions were approximately 800,000 sq m a year. Most of the industrial premises planned for completion in H2 2013 are concentrated in the South (39%), North (22%) and East (19%) of the Moscow region. Moreover, 76% of the projects are concentrated within a 15 to 60 km radius of MKAD. There will continue to be a shortage of industrial premises despite the increased pipeline as the majority of constructed premises have already been absorbed. By mid-2013 only 40% of constructed industrial premises remained available. We expect that these premises will be absorbed before completion given the high demand for quality industrial space. As a result, the current shortage of supply in the industrial market in the Moscow region will remain and will continue to favour the developers and landlords. COLLIERS INTERNATIONAL P. 36
  • 37. Russia LP Bykovo LP Bykovo Moscow Region, Bykovo Moscow Region, Bykovo We helped BSH Bosch to establish its Russian distribution centre in the Moscow Region with the leasing of c. 60,000 sq m of space in this complex. As the exclusive agent representing the landlord, we leased approx. 55,000 sq m to fruit and vegetable 3PL provider Univeg Logistics in this logistics park. Based on the tenant’s requirement, the warehouse premises were completely upgraded with refrigerators. South Gate Industrial Park PNK - Chekhov Moscow Region, Belye Stolby Moscow Region, Chekhov Paul Hartmann AG has located its first factory in Russia on this industrial scheme. The deal was the only project for a global manufacturing company in the Moscow region in 2012 and received the CRE Award as the best industrial deal in 2012. We advised one of Russia’s biggest retail chains on a build-to-suit agreement for the development of multi-temperature warehouse in this Class A logistics complex. INDUSTRIAL AND LOGISTICS | CENTRAL AND EASTERN EUROPE COLLIERS INTERNATIONAL P. 37
  • 38. Slovakia Market Highlights In H1 2013, total modern industrial supply in Slovakia equaled 1,189,660 sq m. During this period, 4,000 sq m was added to the market due to the development of the new hall for MC Syncro developed by J&T in DNV logistic park. ProLogis holds the largest share (35.89%) of industrial stock with 427,000 sq m of space, followed by Pointpark at 12.91% and 153,600 sq m and HB Reavis at 9.75% who built 116,000 sq m of leasable Grade A premises. Demand during H1 2013 was driven mainly by logistics services providers and the automotive and electronics industries. 81% of the 112,900 sq m of space leased in Slovakia was from transactions concluded in the Bratislava region. H1 2013’s demand figures were approximately the same as take-up in H2 2011 (119,108 sq m). Key transactions in H1 2013 included: DHL prolongation – ProLogis, Senec (25,257 sq m) NAY prolongation – ProLogis, Senec (19,717 sq m) DSV lease – ProLogis, Senec (11,910 sq m) MC Syncro lease – J&T, Devinska Nova Ves (4,000 sq m) Slovakia will remain one of the fastest growing economies in Europe. The industrial vacancy rate decreased from 8.54% in H2 2012 to 6.22% in H1 2013 as only one building was delivered to the market and developers are focused on leasing existing vacant space. MAJOR LOGISTICS CENTERS AND MARKET INDICATORS 2 # Logistics Center Locations Prime Rent Warehouse Prime Rent Bulk Prime Yield 1 Bratislava Colliers International Suché Mýto 1 811 03 Bratislava Slovakia MARTIN ŠAFÁRIK Senior Associate Industrial Agency +421 911 561 651 MARTIN VARAČKA Partner Office & Industrial Agency +421 911 852 589 INDUSTRIAL AND LOGISTICS | CENTRAL AND EASTERN EUROPE €3.70 €3.40 9.00% 2 Košice 1 €3.90 €3.90 9.00% The highest share of vacant space was located in the Žilina region with a vacancy rate of 57.1% (8,000 sq m), followed by Bratislava region with a vacancy rate of 7.5% (61,387 sq m) and by the Košice region with a vacancy rate of 6.2% (2,000 sq m). Industrial supply will increase in H2 2013 as new premises will be delivered to the market. Four new developments are under construction: A speculative development in Senec from Karimpol (12,500 sq m), a tailor-made development for DHL (3,400 sq m) near the Bratislava Airport, an expansion of an existing client (600 sq m) in Trnava Logistics Park developed by Panattoni and a second hall in the park of (10,000 sq m) developed by Immorent in Immopark Košice. In H2 2013, demand from companies associated with the automotive industry and electronics will increase. New production/logistics premises – Presskam industrial park will be developed in vicinity of the VW plant (5 km to JIT gate) to address the requests of the automotive suppliers. Logistics providers prefer short-term leases to match their contracts, however for new developments, we expect that developers will require a longer rental period and higher rental prices. COLLIERS INTERNATIONAL P. 38
  • 39. Slovakia Gebrueder Weiss/Whirlpool Faurecia Senec Logistics Centre, Pointpark Bratislava Kosice Airport In helping to provide Whirlpool with logistics solutions for the distribution of its white goods across Eastern and Central European countries we identified and secured facilities in Senec Logistics Centre (Goodman International) and Pointpark Bratislava (Pointpark Properties). Both locations are operated by logistics provider, Gebrueder Weiss, and the combined size of the logistic centres is 33,300 sq m. On behalf of automotive parts manufacturer Faurecia, we managed the tender for the location, site and development company for a new facility in Kosice. Based on the results of the tender, and incentives negotiations with representatives of the City of Kosice, Faurecia decided to sign a lease contract with Goodman International. A new facility totalling 23,000 sq m was handed over in August 2011, where Faurecia continues in its parts production for key clients, such as Mercedes and Rover. Hopi Schnellecke Senec Logistics Centre J&T-IIG DNV Logistic Park We helped Goodman International put together a ‘package deal’ with logistics provider HOPI that included two transactions: the sale and leaseback of HOPI’s branch in Gyal, Budapest and the lease of a new logistics centre in Senec (16,000 sq m). The efficient co-operation between our teams in the Czech Republic and Slovakia enabled a complex transaction, and the deal gave the end-user a flexible solution to its expansion in the region. Acting as consultant to logistics company, Schnellecke, in its search for suitable premises close to the VW factory , we helped to identify and acquire a newlybuilt production-logistics facility in J&T-IIG’s DNV logistic park outside Bratislava. The facility is being developed in two phases; the first, 9,700 sq m; the second, 5,700 sq m. As a result of the new location, Schnellecke has reduced its distance to VW by 25 km. INDUSTRIAL AND LOGISTICS | CENTRAL AND EASTERN EUROPE COLLIERS INTERNATIONAL P. 39
  • 41. Albania Market Highlights The Albanian economy has continued to see slow yet positive growth. Inflation remained low at 2.2% in 2012, despite an increase from the 1.7% recorded in 2011, while unemployment maintained its favourable trend, posting a decline for the third consecutive year. Foreign and capital investments continued to increase due to the stronger investment climate and regulatory improvements. Most of the country’s GDP is generated by industries and enterprises operating within the Tirana-Durres-Fier triangle. The capital, Tirana, is the greatest contributor to economic development and is home to almost 90% of the largest national companies and 80% of foreign companies present in Albania. Tirana Logistic Park is the first logistics facility in Albania and the largest logistics park in the western Balkans. Under the Communist regime, mining, metallurgy, food processing, textiles, lumber and cement were among the country’s leading industries, when heavy industry was a priority and some factories were able to export. After the regime’s collapse in 1990, the industrial and manufacturing sectors declined due to the lack of new technology and financing, and the dilapidated condition of the factories. However, a revival of chromium, steel and cement industries came with the increase of foreign investment in 2000; construction requirements, especially from the housing sector, were one of the contributing factors to the growth in investment. Although it is shrinking, mining is still considered to be the largest sector in the economy, given the country’s rich deposits of bauxite, chromium, nickel, iron, copper ores and petroleum. In the 1980s, Albania was ranked third worldwide in chromium ore production; today, the export of raw materials remains crucial for foreign exchange earnings. In terms of other industries, agribusiness and textiles are the major light industries where Albania has a competitive advantage. The textiles sector is the largest job creator among the light industries, and is primarily focused on the manufacture of clothes and footwear uppers, which comprise the majority of the country’s exports. The agribusiness sector has recorded one of the highest rates of growth in recent years, with the food and fish processing sub-sectors experiencing the fastest expansion across the whole of Albanian industry. The growth in the processing of agricultural products, together with the development of allied services (including packaging, marketing and distribution) has been key to the revitalisation of agriculture. As a result there are now strong investment opportunities for the establishment of production, sanitation, packaging, and warehousing facilities, as well as laboratories for quality control. Colliers International Rr. Ibrahim Rugova Sky Tower Suite 141 Tirana, Albania STELA DHAMI Managing Director +355 42 400 471 INDUSTRIAL AND LOGISTICS | SOUTHEAST EUROPE Tirana Logistic Park Tirana-Durres Highway Tirana Logistic Park is a new development project involving the construction and leasing of five warehouse/industrial properties. With approx. 80,000 sq m of buildings, on a total of around 200,000 sq m of land, this will be the first logistics and industrial park in Albania capable of meeting European standards in storage, logistics and manufacturing. COLLIERS INTERNATIONAL P. 41
  • 42. Bulgaria Market Highlights The industrial and logistics property market in Bulgaria is registering a growing demand for modern industrial premises. This trend is being determined by a number of international companies undertaking research into the Balkans region as an offshoring destination for their production facilities, mainly in the light industrial sector. Some of the advantages of the Bulgarian market include: economical stability, a convenient geographical location to service Eastern and South-Eastern Europe, low operational costs, the availability of a skilled labour force, and the country’s EU membership. Regions outside Sofia, which currently offer lower operational costs, are of primary interest; a further draw is that there is no tax on corporate profits in some of these regions. Investor interest in the Plovdiv region remains particularly strong; in the near term, the industrial market in this region is anticipated to develop mainly through built-to-suit projects. The development of the outsourcing by industrial companies continues to determine demand for industrial space in Bulgaria. An increase in supply was recorded in the market as a whole in 2012, mainly due to an increase in available sub-leased space in owner-occupied buildings. This trend has been consistent over the last two years and is expected to remain so through 2013. Potential tenants, however, are showing little interest in these premises, as they do not meet the requirements for contemporary logistics space. MAJOR LOGISTICS CENTERS AND MARKET INDICATORS 3 1 # Logistics Center Locations Prime Rent Warehouse Prime Rent Bulk Prime Yield 1 Sofia Colliers International Business Park Sofia, Build. 7B, II 1766 Sofia Bulgaria VERKA PETKOVA Manager Office & Industrial Services +00359 896 777 614 INDUSTRIAL AND LOGISTICS | SOUTHEAST EUROPE ¤2.50 11.00% 2 Plovdiv ¤3.00 ¤2.00 11.50% 3 Varna 2 ¤3.80 ¤3.80 ¤2.50 11.75% The supply volume of logistics and industrial property in Sofia has reached approx. 666,000 sq m, and this includes speculative and built-to-suit projects, as well as space offered for rent by third-party logistics providers (3PLs). The construction of two new speculative logistics projects in the capital is expected to start by the end of 2013, both with total space of c. 15,000 sq m. Modern projects in Sofia, that are certified as sustainable buildings according to international standards, are reporting notably high absorption rates and attracting international tenants with long-term contracts. As a result, the landlords of such projects are considering expansions and the development of new built-to-suit premises. In terms of outsourcing, the industrial sector continues to be dynamic in selected areas, with most activity originating from FMCG, consumer electronics and pharmaceutical companies. Bulgaria will continue to be a key consideration as an outsourcing location among Western and Central European manufacturing companies in 2013. Rental rates are forecast to remain stable. COLLIERS INTERNATIONAL P. 42
  • 43. Bulgaria Volvo Truck Center Logistics Park Varna Sofia Varna Volvo required its new truck centre to be located on Sofia’s ring road, with good accessibility and visibility, and to be developed to fit a range of precise requirements. We successfully met Volvo’s needs, finding a plot with the appropriate location and developer, securing a land area of approximately 20,000 sq m, and negotiated the desired terms and conditions. Representing the landlord, LPV, we helped to secure logistics giant, Schenker, as a tenant with 5,000 sq m in one of the newest warehouse buildings of this modern logistics complex situated in the coastal city of Varna. Yazaki & Miroglio Factory Kaven Orbico Distribution Centre Sliven - Industrial Zone Elin Pelin We represented the landlord, Miroglio Bulgaria, in the disposal of its production facility located in the city of Sliven, a result of closure of the plant. The acquisition by the client, Yazaki, is part of its expansion in the region. We provided consultancy for the whole negotiation process of the purchase agreement, which included legal advisory services. We provided a turnkey solution for Kaven Orbico, facilitating a land purchase and built-to-suit warehouse facilities specified to include ambient and temperature controlled storage. The construction of the distribution company’s warehouses has been planned for three phases which will total a built-up area of 22,000 sq m. INDUSTRIAL AND LOGISTICS | SOUTHEAST EUROPE COLLIERS INTERNATIONAL P. 43
  • 44. Croatia Market Highlights The industrial and logistics sector remains the least developed real estate sector in Croatia, and is characterised by a lack of modern Class A warehouse supply. As 2013 is the year of country’s accession to the EU, investors perceptions of the Croatian market are expected to change and, as result, this will bring new retail and logistics players into the country. Increased investor interest for goodquality product is anticipated. As 2013 is the year of country’s accession to the EU, it is expected to change investors perceptions of the Croatian market and bring new retail and logistics players into the country. The Zagreb area and its satellite cities serve as the main focal point for business, and is where the majority of the logistics stock is situated. The most developed area for logistics space is situated on the western side of Zagreb, due to its strong road infrastructure and proximity to the most frequently-used border crossing with Slovenia at Bregana. The Zagreb area has a total stock of industrial and warehouse space of close to 800,000 sq m, of which only a small fraction can be classified ‘modern’ by European standards. Industrial zones within the city are Jankomir to the west and Žitnjak on the eastern exit routes of the city. The development of modern stock in the last few years has been typified by a shift of logistics centres to highway exits within the Zagreb area circle. These centres include Zagreb Logistics Park in Sveta Nedjelja, Immopark in Jasterbarsko, Alca 1 MAJOR LOGISTICS CENTERS AND MARKET INDICATORS # Logistics Center Locations 1 Zagreb Colliers International 42 Ilica Street 10000 Zagreb, Croatia BORIS MARTINEC Analyst +00 385 99 2108 753 INDUSTRIAL AND LOGISTICS | SOUTHEAST EUROPE Prime Rent Warehouse €5.00 Prime Rent Bulk €4.50 Prime Yield 10.50% and Rewe Group centres in Sveta Helena, as well as MSAN in Rugvica. With the future reconstruction and development of the new Zagreb International Airport, we also expect logistics activity to increase in the area of Velika Gorica over the next few years. 2012 was a year of subdued transactional activity and a limited number of enquiries for modern stock. This was due to the economic downturn, with many companies being put out of business or being forced to downsize into smaller facilities. However, we expect demand for logistics space to turn in the second half of 2013 and more noticeably in 2014, mainly due to the accession to the EU which will bring third-party logistics companies into the market. At present we are seeing enquiries for 1,000-5,000 sq m in modern logistic facilities from companies that are preparing to establish their businesses in Croatia for the first time in anticipation of the imminent end of customs controls. The continued development of the road infrastructure in Croatia will provided a good basis for development of the logistics hubs, improving east to west access and movement. COLLIERS INTERNATIONAL P. 44
  • 45. Croatia IMMOPARK Zagreb Sveta Helena Logistic Zone Jastrebarsko Exit from A1 Highway Ulica Sveta Helena 182, 10382 Donja Zelina IMMOPARK Zagreb is one of the largest logistics centres in Croatia and is located 20 km from the city on the A1 Highway exit to Jastrebarsko. It has more than 66,000 sq m of warehouse, production and office space. The centre boasts flexible premises and modern equipment, satisfying the requirements of both large and small tenants. We have been recently appointed to market and lease the development. This logistics development is situated 30 km from Zagreb on the highway A4/E65/E71, and facilities are currently owned by Grawe Group (20,000 sq m) and Alca (32,000 sq m). A good location and available land make this zone suitable for future logistics developments. We have recently been instructed as marketing and leasing agent for the scheme. Commercial Project in CBD Zone Aquamaritime Žitnjak bb Ventilatorska 5, Lučko After extensive negotiations with the new tenant and the landlord, we succeeded in leasing 1,100 sq m of warehouse space, 300 sq m of showrooms, 250 sq m of office space and 15 parking places to Katapult Zagreb. Acting as tenant representative for Aquamaritime, we were required to find a mixed-use project (including offices, showroom and a small warehouse) for the client. We managed to identify a project that was in the development phase, and conducted a transaction that was a build-to-suit engagement rather than a standard lease arrangement. INDUSTRIAL AND LOGISTICS | SOUTHEAST EUROPE COLLIERS INTERNATIONAL P. 45
  • 46. Serbia Market Highlights As a consequence of the global economic and financial crisis, as well as the influence of the transitional recession, Serbian cities are recording a powerful process of deindustrialization. During past years, Belgrade lacked a supply of available land to construct modern industrial and logistic space. This came as a consequence of urban regulation problems and very high land prices along the main traffic corridors, causing investments in these city areas to be profitable only as commercial space. Because of this, development of the first large scale modern industrial and logistics facilities appeared in the wider area of the Belgrade municipality. Good geographical position of Serbia provides excellent potential for further developing of the industrial market The Dobanovci area is considered the most attractive area for various industrial and logistics projects due to its easy accessibility and proximity to the city centre and Belgrade airport. It belongs to the municipality of Surcin, Belgrade, positioned at the crossroads of the ring road and E-70 highway. Average distance from the city centre is about 15 km and the area has a developed transportation infrastructure which is a considerable advantage. In May 2012 section A of the Belgrade bypass road connecting Batajnica to Dobanovci was opened, increasing the importance and attractiveness of Dobanovci for potential investors. This area mostly comprises logistics centers rather than industrial properties. The Simanovci area is an industrial zone which belongs to municipality of Pecinci, about 20-25 km from Belgrade and situated close to highway E-70 (toward Zagreb). This is the most developed industrial zone in the wider Belgrade area. The 1 MAJOR LOGISTICS CENTERS AND MARKET INDICATORS # Logistics Center Locations 1 Belgrade Area Colliers International Boulevard Mihajla Pupina 115 D Belgrade Prime Rent Warehouse €5.00 Prime Rent Bulk €2.50 Prime Yield 11.00% main contributors to the development boom in this area are land and infrastructure availability, tax incentives regarding new employment and good transportation connections with all parts of the country. Ugrinovci is an industrial zone which belongs to the municipality of Stara Pazova and is located along Highway E-70. This area presents an attractive location, due its proximity to Belgrade. Krnjesevci is industrial zone which also belongs to the municipality of Stara Pazova. It is situated along Highway E-70, about 20-25 km from Belgrade. NIKOLA DJOGATOVIC Director Retail Agency +381 63 274 124 INDUSTRIAL AND LOGISTICS | EUROPE Due to the geographical position of Serbia, the industrial market is still one of the most promising markets for development compared to the other segments of real estate. COLLIERS INTERNATIONAL P. 46
  • 47. Serbia Logistic Team Sekulic Nelt Logistic Center Ugrinovci Dobanovci Logistic center comprised of a total area of 14,000 sq m with a total of 28,500 pallet places. The warehouse is equipped with a modern high pallet rack system (Pal Rack) with 8,000 pallet places. The center has a separate warehouse for ADR and other chemical goods with 2,200 pallet places. Additional pallet places include: 3,200 places for goods needing to be stored between -25°C and +4°C, 1,000 places for alimentary goods with animal origins needing to be stored between 0°C to +6°C and 1,200 places for technical goods needing atmospheric temperatures. The complex consists of six warehouses (35,000 sq m) and one office building (1,800 sq m). There is also an area with an industrial track and cranes, suitable for use with heavy loads, as well as other purposes and types of goods. Milsped Logic Logistic Lagermaxx AED Krnjesevci Simanovci Milsped Logic Logistics center opened in October 2013 and has a total warehouse area of 39,500 sq m. Block system with capacity of 5,000 pallet places and High bay racking system with capacity for 14,500 pallet places with temperature regime - ambient temperatures from 14°C to 18°C. Center is equipped with 62 loading and unloading ramps and has ISO9001 and HACCP standards. Warehouse area within 10,000 sq m, total capacity of 8,000 pallet places, floor storage of 4,000 sq m and 2,000 sq m of customs warehouse. 1,000 sq m of warehouse with adjustable temperature regime. Number of loading and unloading ramps is 28. INDUSTRIAL AND LOGISTICS | EUROPE COLLIERS INTERNATIONAL P. 47
  • 48. Turkey Market Highlights Istanbul has always played a leading role in an industrial production sector which is developing very rapidly; currently it provides 35% of the country’s total production and employs 45% of the country’s industrial workers. A general analysis of Istanbul and its surroundings indicates that the most preferred areas for industrial buildings are Hadımköy, Beylikdüzü, Güneşli, Yenibosna, İkitelli, Ayazağa and Kemerburgaz on the European side, and Dudullu, Ümraniye, Samandıra, Kartal, Pendik, Kurtköy, Tuzla and Gebze on the Asian side. With the transportation advantages of being located on or close to E5 and TEM highways, Güneşli, Yenibosna, Beylikdüzü and Hadımköy areas are facing changes on both the demand and supply side. The Turkish State Railways Corporation (TCDD) is planning to build 15 logistics villages in an effort to meet the need for warehousing. 80% of these industrial areas consist of aged buildings, which are unattractive for multinational end-users, and many firms are therefore choosing to build their own custom-made warehouses. Demand is increasingly for higher-quality construction and adherence to international standards in aspects such as ceiling height, floor loading capacity and column grids. The advent of the industrial park in Turkey is helping to fill the void of suitable areas for industrial development and they are typically attracting multiple tenants on long-term lease agreements There was no significant change in industrial rental rates during 2012 and first part of 2013. In central locations where the transportation network is developed, land prices and rent levels remained comparably high against areas with poor access. Estimated sale prices for rapidly developing İkitelli-Yenibosna, Samandıra-Kartal and Dudullu regions are as high as $1,500/sq m. The Samandira-Kartal region remains attractive even though the rents have increased to $7.50/sq m. Located to the west of Istanbul city centre, Catalca, Silivri and Cerkezköy, with reasonable land MAJOR LOGISTICS CENTERS AND MARKET INDICATORS # Logistics Center Locations Prime Rent Warehouse Prime Rent Bulk Prime Yield 1 Gebze €4.60 €4,.60 9.50% 2 Tuzla €4.60 €4.60 9.00% 3 Hadımköy €4.60 €4.60 9.50% 4 Dudullu €5.35 €5.35 9.00% €4.75 €4.75 9.50% 6 Samandra - Kartal €5.75 €5.75 9.00% 7 İkitelli - Yenibosna 1-7 €4.60 €4.60 8.50% 5 Colliers International Büyükdere Cad. Enka Binası No:108 Kat:6 Esentepe Şişli, Istanbul, Turkey 34394 TUĞBA AYAZOĞLU ERCAN Senior Industrial Consultant +90 212288 6262 INDUSTRIAL AND LOGISTICS | SOUTHEAST EUROPE Beylikdüzü Esenyurt prices and rents, present opportunities for investors. The average expected yields for the industrial investments are around 8.50-10.00% and the average expected market rents are between $6.00-$7.50/sq m. Estimated sale prices for the industrial-zoned lands in primary industrial areas are between $300 and $750 /sq m, depending on factors such as location, infrastructure, accessibility and allowed construction area. The first phase of the Third Bridge Road Project is expected to be finished in 2015 and with Silivri, Halkalı and Tuzla regions designated as logistic areas in the 1/100,000 Environmental Plan, access to these regions will be significantly easier on the bridge’s completion and, as a result, demand is expected to increase even more. Another factor, which will affect the industrial and logistics real estate sector is the Turkish State Railways Corporation (TCDD) plan to build 15 logistics villages to meet the increasing need for warehousing. A total of 1.5 million sq m is scheduled to be built in Hadımköy-Arnavutköy on the European side of Istanbul and GebzeMuallimköy in Kocaeli. TCDD also plans to build a logistics centre in Köseköy-Kocaeli with a total area of 765,000 sq m. COLLIERS INTERNATIONAL P. 48
  • 49. Turkey Industrial Facility and Land Disposal Investment Land Disposal Hacı Ömer Sabancı OIZ, Adana Kartal, Istanbul We represented Bayer Türk Kimya in its disposal of a warehouse site located in this industrial zone in Adana. The property comprises a 1,370 sq m industrial facility including office space, a warehouse and a security building, situated in a 23,555 sq m site. We acted for Altra Optique in its disposal of an ex-industrial site located in Kartal, on the Asian side of Istanbul. The property has a gross land area of 1,496 sq m and includes a 1,155 sq m factory building. Warehouse Warehouse Hadımköy, Istanbul Güneşli, Istanbul We advised Tremco Illbruck, a company manufacturing structural glazing systems, in sourcing a warehouse facility to lease in Hadımköy. We demonstrated our expertise in tenant consulting by finding the right property and by supporting the client in signing a lease agreement with best possible terms and conditions. We were appointed by Eti, a leading local food producer, to find a suitable location and to negotiate optimum lease terms for its new warehousing requirement in the Güneşli region. The warehouse leased by Eti, with our support, is being used by the company to supply the Istanbul market with its products. INDUSTRIAL AND LOGISTICS | SOUTHEAST EUROPE COLLIERS INTERNATIONAL P. 49
  • 51. Norway Market Highlights Transaction 2013, as was the case in 2012, has thus far been a very quiet year for the transaction market in the industrial sector. Furthermore, the large development projects that were purchased last year with the aim of residential conversion, have been few and far between in 2013. The accumulated total in the industrial sector in 2013 is in excess of 1,- Billion NOK which is a third of the total figure of last year. Included in this total is a large portfolio purchase in the Trondheim area by Oslo Pensjonsforsikring from Reitan Eiendom earlier in the year. This deal is responsible for more than half of the turnover thus far in 2013, with the deal costing Oslo Pensjonsforsikring 742,5,- Million NOK. In total we have counted six deals over 50,- Million NOK in 2013. By far the largest deal in 2012 was Aker Solutions purchase of an industrial portfolio for NOK 750 million. DSV has been disposing of properties in Norway this year and we are actively assisting them. We sold their property in Arendal and are currently working on selling their property in Kolbotn outside of Oslo. The reasons for the low turnover in industrial transactions has many plausible explanations. Financing for several projects has been difficult to obtain as well as a consensus that there has been a lack of attractive developments in the market. MAJOR LOGISTICS CENTERS AND MARKET INDICATORS Prime Rent Prime Rent 850 800 6.50% 1,000 950 6.50% 3 Oslo 1,270 1,080 6.25% 4 Berger 900 850 6.50% 5 Gardermoen 800 800 6.50% # Logistics Center Locations 1 Vestby 2 1-5 Colliers International Hegdehaugsveien 31, 0352 Oslo CARL FREDRIK MARTI Broker + 47 22 06 62 80 INDUSTRIAL AND LOGISTICS | NORDICS Ski / Langhus / Vinterbro Warehouse - NOK Bulk - NOK Prime Yield Letting Rents for industrial and logistics property have remained stable. For the time being, we estimate that top rents for a high-quality standard industrial development will continue to be in the region of NOK 1,100–1,150 per sq m. However, this level of rent will only be achieved in strategic locations which are connected and close to main highway intersections, and at buildings with the right specifications. At the same time as there is pressure on the rents for build-to-suits, rents for existing vacancies remain even and on a high level in the major cities. The bulk of the demand here is for 3,000-5,000 sq m units. The limited supply means that even ineffective old buildings in this size band can be let at relatively high rents despite the overall leasing market being weaker. COLLIERS INTERNATIONAL P. 51
  • 52. Norway Østre Kullerud vei 6 Gneisveien 3 Sandefjord Berger A long-term lease has been secured from an established tenant at this office and warehouse property some 110 km south-west of Oslo. DHL has taken a long lease on this warehouse to the north of Oslo. Buråsveien 35 Kristiansand Supermarket chain, Rema 1000, has acquired this warehouse and office on a long lease. The property is located around 320 km south-west of Oslo. INDUSTRIAL AND LOGISTICS | EUROPE COLLIERS INTERNATIONAL P. 52
  • 53. Sweden Market Highlights The yield for prime products is fairly stable at a relatively low level. This, in combination with steady or decreasing construction costs, has put pressure on rents for long-term build-to-suit projects. This is one of the reasons why the current 24-month period (2012-2013) has seen the highest number of new constructions ever. Within this period, a total of 32 properties, each with an area of 10,000 sq m+, will be completed. The current 24 month period (2012-2013) has seen the highest number of new constructions ever. Another reason for the strong take-up is that many of the projects are a consequence of cost-saving programmes. Many companies are chasing costs and are consolidating their logistics structures, and this is often resulting in new national or Nordic distribution centres. Most of the 32 properties are owned by professional landlords or investors; however, during recent years we have witnessed a slight increase in the ownership by end-users. One reason is that a fairly secure end-user can acquire attractive terms from banks, even better than those obtainable by real estate investors. At the same time as there is pressure on the rents for build-to-suits, rents for existing vacancies remain even and on a high level in the major cities. The bulk of the demand here is for 3,000-5,000 sq m units. The limited supply means that even ineffective old buildings in this size band can be let at relatively high rents despite the overall leasing market being weaker. MAJOR LOGISTICS CENTERS AND MARKET INDICATORS # Logistics Center Locations Prime Rent Warehouse Prime Rent Bulk Prime Yield 1 Stockholm 1 3 2 €8.30 €5.20 6.75% 2 Malmo €5.20 €5.00 6.75% 3 Gothenburg €6.40 €5.20 5.20% Colliers International Ringvägen 100 118 60 Stockholm ERIK BARNEKOW Manager Industrial & Logistics +46705561570 INDUSTRIAL AND LOGISTICS | NORDICS COLLIERS INTERNATIONAL P. 53
  • 54. Sweden Distribution Centre John Deere Brunna, Stockholm Stockholm We were appointed by Altia to find a new real estate solution for its Swedish distribution centre. The answer was a build-to-suit project, which reduced the cost per pallet by 50%. We advised John Deere on establishing a new distribution centre in Stockholm. The new building was built according to John Deere’s specifications and located in the same area as the former distribution centre, yet delivered significant gains in efficiency and reductions in real estate costs. Warehouse Facility 25,000 sq m Building Sätra Stockholm Borås We were appointed to let a modern warehouse in Stockholm. A long-term lease was successfully signed with a solid tenant and the property was the sold to an investor. We were appointed to market this speculative development of approx. 25,000 sq m in Borås, close to Gothenburg. The building was successfully let prior to completion. INDUSTRIAL AND LOGISTICS | NORDICS COLLIERS INTERNATIONAL P. 54
  • 56. Estonia Market Highlights An increase in export figures in 2010-2011 improved companies’ future outlook and increased demand for industrial and warehouse space during the last two years. With growing confidence and economic improvement, the number of industrial companies planning to expand or move their business to a better location in the future and therefore looking for additional or new premises continues to remain high. While in 2011 companies expanded their activities and demanded more warehouse/ industrial space were primarily export-oriented businesses, then 2012 saw increasing demand for warehouse space due to growing domestic consumption. Lower rent and land prices, as well as cheaper operating costs continually attract Swedish and Finnish logistics and industrial companies’ to Estonia. Activity in this segment can be seen mainly among companies whose core business is within the industrial sector. The industrial and warehouse sector continues to be reasonably active. 1 The majority of requests for warehouse space in Harju County in 2012 came from retail operators, distributors and FMCG companies. At the same time, logistics companies were active in the market as well. Quite a significant number of the transactions in 2012 were also concluded by companies from manufacture and the wholesale of fabricated metal products industry, as well as from manufacture and the wholesale of electronic products industry. 2 MAJOR LOGISTICS CENTERS AND MARKET INDICATORS # Logistics Center Locations 1 Tallinn Municipality 2 Colliers International Lõõtsa 2a (Ülemiste City, Puusepa A-building VIII floor) 11415 Tallinn TARMO KALVISTE Head of Commercial Real Estate Department +372 5013 544 INDUSTRIAL AND LOGISTICS | BALTICS Harju County Municipalities Prime Rent Warehouse Prime Rent Bulk Prime Yield €4.80 ¤4.20 9.00% €4.80 ¤4.20 9.00% In general, the demand for large industrial units (approx 2,000 sq m and more) has been consistent (especially from logistics companies and metal products manufacturers). The most favoured are premises close to Tallinn with good public transport connections, which is very important in the context of labour force and business communication. Additionally, together with export growth, exportoriented companies have again started to group and expand around harbour areas, with the aim of saving on logistics costs. During recent years the most intensive development of new industrial and warehouse facilities has been constantly concentrated in Tallinn’s suburbs and in industrial parks in nearby municipalities. The most developed logistics areas lie in the eastern and south-eastern parts of the city. The number of built-to-suit projects is and will continually predominate among new projects although the proportion of speculative industrial projects is expected to increase. Overall, the industrial and warehouse sector continued to be reasonably active and the trend is expected to continue throughout 2013, driven by constant demand for high-quality modern logistics premises. However, as the process of finding a suitable property is time consuming and complicated, conclusion of lease contracts or transactions continues to occur with some lag time. COLLIERS INTERNATIONAL P. 56
  • 57. Estonia VGP Park Tallinn (Tänassilma village) Coca-Cola Tänassilma Village, Saku Parish, Harju County Kadaka Rd 76b and 76c, Tallinn We provided an exclusive investment consultancy service which eventually led to the largest singleobject real estate deal in Baltic States in 2012 (the acquisition of 40,000 sq m VGP warehouse park with the transaction price of 24 million euro). We provided a brokerage and investment consultancy services concerning former Coca-Cola plant in Tallinn (sale and lease negotiations regarding warehouse and office premises of approx. 25,000 sq m). The investment deal will be finalised in June 2013. VGP Park Nehatu (Loo small borough) Loovälja Aasa Rd, Loo Small Borough, Jõelähtme Parish, Harju County Loovälja Rd 7, Liivamäe Village, Jõelähtme Parish, Harju county We provided a brokerage service concerning new warehouse premises in VGP Park Nehatu (speculative and built-to-suit warehouse premises of approx. 49,000 sq m). We provided a brokerage service concerning new warehouse premises in Loovälja development project (built-to-suit warehouse premises of approx. 38,000 sq m). We also provided a valuation of this development project (Loovälja Rd 7 land plot). INDUSTRIAL AND LOGISTICS | EUROPE COLLIERS INTERNATIONAL P. 57
  • 58. Latvia Market Highlights Amid Latvia’s export and import growth, logistics operators increased their volumes in 2012, which in turn led to an increased demand for industrial and warehouse premises. In 2012, existing market players were actively searching for good-quality warehouse premises, with demand originating mainly from logistics operators, distribution and retail companies. Besides existing players, a few new names appeared in 2012 showing an interest in either doing business in Latvia or using its territory as a platform for operations in other markets. Another trend that has been witnessed since 2010 is the presence of trading and retail companies from Russia who have used logistics operators’ warehouses and services located in Latvia as a trading platform between the EU, Russia and China. In 2013, retailers and trade companies from Russia are expected to continue exploring options to outsource local logistics companies for goods transit and storage in Latvia. If no major changes appear in legislation or customs control, this trend is likely to increase. Potential for new development. The total stock of Class A and Class B industrial and warehouse space is 729,000 sq m. From this, 576,500 sq m is speculative and 152,500 sq m build-to-suit. Around 40% of the total stock is located within Riga’s city limits. The other 60% is located around the Riga Ring Road (near Kekava, Olaine, Marupe, Salaspils and Jelgava). The vacancy rate for total industrial stock (including both speculative and build- MAJOR LOGISTICS CENTERS AND MARKET INDICATORS 1 2 3 # Logistics Center Locations Prime Rent Warehouse Prime Rent Bulk Prime Yield ERIKS BERGMANS Brokerage Department Director +371 2643 0099 INDUSTRIAL AND LOGISTICS | BALTICS ¤3.70 9.25% €3.00 ¤3.00 9.25% 3 Kekava Municipality Krišjana Valdemara iela 21, Riga, LV-1010 €4.20 2 Jelgava Municipality Colliers International 1 Riga Municipality €3.50 ¤3.00 9.25% to-suit projects) decreased by 8.8 percentage points in 2012, reaching 4.6%. The limited supply of industrial space over 10,000 sq m could lead to new built-to-suit developments in 2013 and 2014, prompted by either developers’ initiatives or the end-users themselves. Due to decreasing vacancy and market stabilisation, there is a potential for investment transactions in 2013. Rental rates have slightly increased. For Class A industrial premises, rents range from €3.00 to 4.50 /sq m, while for Class B premises, the lower band of rents has increased in comparison with 2012 and are around €2.00 to 3.60/sq m on average. Looking forward, rates are forecast to rise further, mainly due to the expiration of existing lease agreements signed in 2009-2010, when terms were in favour of the tenants. COLLIERS INTERNATIONAL P. 58
  • 59. Latvia Ronu ieleja 2 Logistic Park Building at Katlakalna Street 9 Kekava District Katlakalna Street 9, Riga We have been involved in lease renegotiations and the introduction of new tenants to one of Latvia’s largest industrial parks. In a period of two years the vacancy rate has been reduced from 80% to less than 10%. We supported BLRT Grupp – the largest shipbuilding company in the Baltics – in its search for a central distribution hub in the Baltic Sea region. Negotiations resulted in the purchase of an existing railway line, about 10 ha of land, 20,000 sq m of production facilities and a 7,000 sq m office building. Izoterms industrial complex Eirkel Business Park ‘Jaunbumani’, Dreilini, Riga Region Langervaldes Street 2, ‘Raubeni’, Ozolnieku Region We attracted logistics and distribution company Via 3L Latvia to this industrial facility which eventually led to a signed lease agreement and the construction of builtto-suit project of 14,000 sq m. Representing the landlord, we identified and secured a major new tenant - DHL - for this scheme. Successful negotiations resulted in the conclusion of a lease agreement for 25,000 sq m, a deal that was announced as one of the biggest deals in the Baltics. INDUSTRIAL AND LOGISTICS | BALTICS COLLIERS INTERNATIONAL P. 59
  • 60. Lithuania Market Highlights The warehouse market in Lithuania continues to recover, reflecting a growing demand for large modern warehouse space during 2012. With a number of tenants relocating or expanding their businesses, the lack of modern and large warehouse space has increased. The strongest demand for warehouse space has been from companies operating in furniture and transport sectors, as well as from companies in biofuels and metal recycling. Along with warehouse operators, logistics companies and retailers were the main tenants, occupying around 90% of the total leased area of speculative warehouses. The growth of industrial production by 4.5% y-o-y and further increase of exports by 14.5% y-o-y in 2012 had a positive impact on industrial and transport sectors of Lithuania. Despite the current lack of modern space across Lithuania and the very-stressed market, developers are still in no rush and are diligently evaluating every opportunity for investment. This is not helped by relatively low rental rates for warehouse space and rising construction costs which are creating unfavourable conditions for the development of new large logistics centres. Any new projects are mostly being developed on a built-to-suit basis or only after securing tenants. MAJOR LOGISTICS CENTERS AND MARKET INDICATORS # 3 Logistics Center Locations Prime Rent Warehouse Prime Rent Bulk Prime Yield 1 Vilnius region 1 Colliers International A. Gostauto St. 40B Vilnius, LT-01112 Lithuania ERIKS BERGMANS Brokerage Department Director +371 2643 0099 INDUSTRIAL AND LOGISTICS | BALTICS ¤3.90 9.25% 2 Kaunas region ¤4.20 ¤3.20 9.75% 3 Klaipeda region 2 ¤4.90 ¤4.10 ¤3.20 9.75% While private investors are still hesitant to develop new projects, the Lithuanian government is making its own efforts to develop new logistics parks in the country’s biggest cities. For instance, the first steps in the development of intermodal freight terminals in Vilnius and Kaunas public logistics centres have been made, with tenders won by construction company, Fegda, for €37 million and €28 million in Vilnius and Kaunas respectively. The growth of industrial production by 4.5% year on year, and a further increase of exports by 14.5% year on year in 2012, has had a positive impact on the industrial and transport sectors in Lithuania, and this has encouraged companies to look for newer and larger warehouse spaces. As a consequence, vacancy levels in modern logistics centres have dropped, and rental rates of warehousing space have slightly increased. With vacancy level ranges between 1-3% in major cities, only a few larger (up to 3,000 sq m) warehousing units are currently available. COLLIERS INTERNATIONAL P. 60
  • 61. Lithuania Onninen Logistics Centre Warehousing Market Kaunas Vilnius Region We provided a valuation of this logistics centre (total area approx. 3,000 sq m) in Kaunas belonging to BPT Secura Investment Fund. For the past few years we have annually provided a comprehensive warehouse market analysis for logistics property managers as well as our expert opinion on the possible rental rates of different warehouse spaces in the market. Klaipeda Business Park Confidential Klaipeda Vilnius and Klaipeda We represented a roof-glazing company in its lease of 3,500 sq m of warehouse premises in this business park situated in the Klaipeda Free Economic Zone. We have been appointed to provide our expert opinion on the potential rental rate of warehouse premises located in Vilnius and Klaipeda. Our consultancy also involved the production of a rental cost optimisation strategy. INDUSTRIAL AND LOGISTICS | BALTICS COLLIERS INTERNATIONAL P. 61
  • 62. Corporate Solutions Today’s leading businesses rely on our Corporate Solutions team to align their real estate and workplace strategy with their core business plan. Our professionals work with corporate occupiers who face some or all of the following challenges: - Occupy properties located in multiple countries - Occupy more than 20 properties - Want to centralise their property transactions on a corporate level - Want to have all of their real estate related information in one, easily accessible location that is regularly updated -Want to monitor and benchmark future real estate liabilities We deliver customized, accountable and innovative solutions that result in the best service experience. Our account managers specialize in understanding your unique needs as an extension of your corporate real estate organization—be it engagement with your internal customers, expertise in your industry, experience in a local market or specialty with an asset type. This creates a competitive advantage for your company by having a partner that will drive scenario planning, make recommendations and implement effective strategies that accelerate your success. Our integrated services platform combines dedicated, accountable professionals, process management tools, technology and consistent processes with our outstanding local market knowledge. In Europe, we have dedicated Industrial and Logistics specialists within our team who provide the following services: Key Contacts GUY DOUETIL Managing Director EMEA Corporate Solutions +44 20 7487 1888 KAREL STRANSKY Director EMEA Corporate Solutions +420 226 537 633 -Integrated client services -Transaction Management -Project management -Advisory services -Workplace Consulting -Sustainability consulting -Corporate real estate strategy -Portfolio optimisation -Merger and acquisition support and consulting -Lease administration -Facilities management TIM CRIGHTON Senior Portfolio Manager EMEA Corporate Solutions +44 207 487 1611 INDUSTRIAL AND LOGISTICS | EUROPE COLLIERS INTERNATIONAL P. 62
  • 63. Corporate Solutions Selected Client Success Stories Faurecia required a global real estate advisor to centralise the management of their real estate projects with a goal of reducing costs. L’Oréal’s requirement was to challenge their real estate costs across Europe, and to improve visibility of their portfolio as information was not centralised. Services provided: Services provided: - An in-house software to organise all real estate related information, abstracting 90% of their leases within six months. - Designed real estate procedures and project monitoring system, allowing Faurecia to have clear visibility on projects anywhere in the world. Tangible benefits to Faurecia: - Proactive management of all critical dates - New procedures allow HQ to control budgets and timelines. - Over €30 million in savings achieved over the first four years of the contract, mainly through lease renegotiations. - Lease audits: 70 leases were audited throughout Europe within 90 days. - Strategic Advice: Colliers clearly identified which leases could be renegotiated and how. - Lease renegotiations - Portfolio management - Brokerage services Tangible benefits to L’Oreal: - Central Real Estate Database created which was so successful that in the following months, the database was extended to the Middle East, Africa, and Latin America. - 16 leases were renegotiated, generating more than €2 million in annual savings. HILTI required an EMEA real estate advisor to centralise the management of their real estate projects with a goal of reducing costs. Services provided: - An in-house software to organise HILTI’s real estate data including abstracting 100% of their leases within five months. - Designed real estate procedures and project monitoring system. - Disposal of locations - On-going advisory on the existing real estate portfolio - Sublease of surplus space - Lease of new properties - Extension of leases Tangible benefits to HILTI: - Proactive management of all critical dates - New procedures allow HILTI to control budgets and timelines. - Achieved over 14% savings in rental costs over the first two years of the contract, mainly through lease negotiations. INDUSTRIAL AND LOGISTICS | EUROPE INDUSTRIAL AND LOGISTICS | EUROPE Colliers International has been awarded the Global Mandate for Tieto - the leading IT service company in Northern Europe providing IT and product engineering services. This new instruction incorporates more than 400 properties across the globe, 200 of which are located in the Nordics region. Colliers provided: - Full review of portfolio, resulting in a number of lease renegotiations and office consolidations, delivering long term cost savings for Tieto. - Full transaction management and lease administration services. - Regular reporting on all ongoing projects. Tangible benefits to Tieto: - Standard processes and documents for all projects housed in an online platform, allowing HQ to control budgets and timelines. - All properties are accounted for in the global database, increasing data transparency. COLLIERS INTERNATIONAL P. 63 COLLIERS INTERNATIONAL P. 63
  • 64. Our Global Services The foundation of our service is the strength and depth of our specialists. Our clients can depend on our ability to draw on years of direct experience in the local market. Our professionals know their specialist markets inside out. Whether you are a local firm or a global organization, we provide creative solutions for all your real estate needs. Colliers International offers a comprehensive portfolio of real estate services to occupiers, developers, owners and investors on a local, regional, national and international basis. We cover 95% of the developed world. Our Global Business Colliers International is the leader in global real estate services defined by our spirit of enterprise. Through a culture of service excellence, and a shared sense of initiative, we have integrated the resources of real estate specialists worldwide to accelerate the success of our clients. Services We offer local expertise around the world. Sectors - Agency Sales and Leasing - Landlord Representation - Tenant Representation - Corporate Solutions - Investment Services - Project Management - Property Marketing - Real Estate Management Services - Research and Forecasting - Valuation and Advisory Services - Hotels - Industrial and Logistics - Mixed Use - Office - Residential - Retail ¤1.5B 104M 13,500 482 62 In Annual Revenue Offices INDUSTRIAL AND LOGISTICS | EUROPE Square Meters Under Management Professionals Countries COLLIERS INTERNATIONAL P. 64
  • 65. Key and Definitions KEY Prime net rent - warehouse space (EUR/sqm/month) Prime net rent - bulk space (EUR/sqm/month) Prime yield (%) DEFINITIONS Prime net rent: The top open-market tier of rent that could be expected for a unit of standard size, and of the highest quality and specification (Grade A), in the best location in the market at the survey date. The figure excludes service charges and taxes, and does not reflect tenant incentives. Warehouse space: 500 square metres/5,000 square feet or more with up to 15 per cent office space, the balance being general industrial/logistics/ distribution space with 6 to 10 metre/18 to 30 feet ceiling heights. Bulk space: 10,000 square metres/100,000 square feet or more with up to 10 per cent office space, the balance being general industrial/logistics/ distribution space with 6 to 12 metre/18 to 36 feet ceiling heights. All loading is dock-height. Prime yield: The yield an investor is prepared to pay to buy a Grade A building, fully-let to high quality tenants at an open market rental value in a prime location. Lease terms should be commensurate with the market e.g. typically 5 yrs +. Net initial yield = First years’ net income/purchase price (prior to deducting fees and taxes). Data as at 30th June 2013 Arrows indicate expected movement over the next 12 months. INDUSTRIAL AND LOGISTICS | EUROPE COLLIERS INTERNATIONAL P. 65
  • 66. Colliers International 50 George Street London W1U 7G +44 20 7935 4499 This document has been prepared by Colliers International for advertising and general information only. Colliers International makes no guarantees, representations or warranties of any kind, expressed or implied, regarding the information including, but not limited to, warranties of content, accuracy and reliability. Any interested party should undertake their own inquiries as to the accuracy of the information. Colliers International excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damages arising there from. This publication is the copyrighted property of Colliers International and/or its licensor(s). ©2013. All rights reserved.