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Lastest trends in European logistics occupier markets and highlight future opportunities ...

Lastest trends in European logistics occupier markets and highlight future opportunities
The economic outlook section sets the background for the future decision-making process in uncertain times
The subsequent section on Occupational Markets examines the latest trends in competition for space, choice and costs. The section features :
- Our European industrial clock, rental map, choice map and a market conditions matrix
- a range of other various data and graphics

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European_industrial_occupier_conditions_q4_2012_slide_deck European_industrial_occupier_conditions_q4_2012_slide_deck Presentation Transcript

  • European Occupier ConditionsOccupiers face looming supply shortageFebruary 2013Industrial
  • Introduction• Welcome to our latest industrial occupier conditions slide deck which accompaniesour bi-annual industrial occupier report• In this slide deck we present the latest trends in European logistics occupiermarkets and highlight future opportunities• The economic outlook section sets the background for the future decision-makingprocess in uncertain times• The subsequent section on Occupational Markets examines the latest trends incompetition for space, choice and costs. The section features:- Our European industrial clock, rental map, choice map and a market conditions matrix- A range of other various data and graphics• We trust you find this presentation a valuable tool in your decision-making process2
  • Economic Outlook:Improving Prospects but Impact of Crisis Continues
  • 4• Improving global economic growth prospects encouraged by latest news andeconomic indicators• But on-going economic problems, particularly in the southern periphery, willcontinue to drag down the overall Eurozone economy• Downside risks to growth continue to include tight fiscal policy in many countries,very high and rising unemployment and difficult credit conditions• Eurozone manufacturing production continues to fall – the ManufacturingPurchasing Managers’ Index has remained in contraction territory for one-and-a-half years• However, the rate of decline eased in January 2013, seeing the PMI rising to aneleven-month highImproving Sentiment But Challenges Remain
  • 55GDP Growth Forecast 2013< 0%0.0 – 0.9%1.0 – 1.9%2.0 – 2.9%> 3.0%0.8%0.2%1.0%-1.4%-1.1%3.4%4.3%0.7%1.9%1.0%0.2%0.0%0.8%-0.4%-0.1%-2.6%1.3%-1.1%Impact Of Crisis Remains…0.7%0.8%1.7%Source: Oxford Economics, January 20133.1%3.7%0.9%2.3%1.1%
  • 6Industrial Production Outlook MixedIndustrialProduction(%Change)
  • 7-15-10-50510152001200220032004200520062007200820092010201120122013201420152016%ChangeEU27 ExportsEU27 ImportsExport Growth Remains at Low Level but Acceleratingin Later YearsSource: IHS Global Insight, February 2013Export Growth pa (%)2012 2013 2014-2016-4 -2 0 2 4 6 8PolandNetherlandsBelgiumItalySwedenFranceHungaryFinlandCzechRepublicRussiaUKGermanyRomaniaSpainEU27 Export and Import Growth pa (%)F
  • 60657075808590951001051102008 2009 2010 2011 2012 2013-50-40-30-20-1001020304050Economic Sentiment (LHS) Retail Trade ConfidenceIndustrial Confidence8European Confidence Indicators ImprovingSource: European Commission, February 2013, Ireland n/aEconomic SentimentRetail Trade Confidence,Industrial ConfidenceException is Industrial Sub-index which Fell Slightly in January
  • European Occupational Markets:High Competition for Modern Space as Supply Remains Constrained
  • 10Occupier Market Constrained by Shortage of AvailableSupply• Declining occupier choice as new development continues to be demand-drivenrather than speculative• Occupiers continue to face strong competition for modern space as demandremains high compared with existing supply• Significantly higher choice for secondary product• Two options for occupiers:− Secure built-to-suit agreements with less flexible lease conditions− Occupiers less dependent on large modern requirements will be able to negotiateshorter leases, lower rents and higher incentives for existing buildings• Rental growth outlook varies significantly across European markets• Rents are set to fall in markets where vacancy levels remain relatively high whilerental increases in select locations will be driven by dwindling modern supply
  • 11Overall Occupier Activity above Long-Term AverageEuropean Warehousing Take-Up (million sq m)Source: Jones Lang LaSalle, February 20130246810121416182002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012millionsqm10-year Annual Average
  • 12Germany accounts for the largest share of take-up, Russiasees the second highest take-up for the third year running0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 5,500HungaryCzech RepublicBelgiumPolandItalySpainUKFranceNetherlandsRussiaGermany.000 sq m2012 2011 10-year average02,0004,0006,0008,00010,00012,000WesternEuropeCEEDistribution Warehousing Take-up >5,000 sq m (UK: >10,000 sq m)Source: Jones Lang LaSalle, February 2013
  • 13Source: Jones Lang LaSalle, February 2013EdinburghLondonBarcelonaMadridMilanBudapestMunichPragueLyonWarsawHamburgBerlinFrankfurtAmsterdamRomeMoscowBrusselsParis<5.0%5.0 – 10.0%10.0 – 15.0%>15.0%BirminghamRotterdamHelsinkiStockholmBucharestIncrease y-o-yDecrease y-o-yStableIncreasing Number of Markets with Restricted OccupierChoice for Modern UnitsVacancy Rates, Q4 2012
  • 14Development Activity Uneven Across CountriesUnder Construction: Q4 2012 compared to Q4 2011Source: Jones Lang LaSalle, February 2013
  • 15Source: Jones Lang LaSalle, February 2013Continued Focus on Non-Spec Development LimitsReadily Available Stock for Occupiers
  • 16Leading to Further Falling of Modern Occupier Choice12-Month OutlookCurrent Choice Future ChoiceBelgium LowCzech Republic MediumFrance MediumGermany LowHungary Very HighItaly MediumNetherlands MediumPoland HighRussia LowSpain HighUK HighSource: Jones Lang LaSalle, February 2013
  • Occupiers Will Continue to Face Strong Competition -Driven by Structural Changes17Five key drivers of future demand1. The impact of demographic change2. Optimisation of supply chains through the useof seaports, airports, rail and road3. The evolution of manufacturing: the relocationof manufacturing closer to domestic markets4. Retail change: the growth of (multi-channel) retail5. Maturing markets: CEE and Russia
  • Expected Rental Declines in Select Markets Creating aWindow of Opportunity in 201318• The bleak economic outlook and continued pressure on costs kept headlinerents under slight downward pressure during Q4 2012• Industrial floorspace is now cheaper in a number of locations compared with theend of 2011, i.e. Warsaw, Barcelona, Madrid, Amsterdam, Milan and Budapest• The latest forecasts point to moderate rental increases this year in selectmarkets such as Frankfurt, Hamburg, Amsterdam and London driven by furtherdecreasing choice• Meanwhile, large rental declines are expected in Moscow, Warsaw and Madridthis year driven by the high level of modern supply• However, a window of opportunity in some of these markets will start closing in2014 when rental growth is expected to accelerate
  • 19European Rental Map, Q4 2012Source: Jones Lang LaSalle, February 2012EdinburghLondonBarcelonaMadridMilanBudapestMunichPragueLyonWarsawHamburgBerlinFrankfurtAmsterdamRome102Moscow5475507772BrusselsParis> 10%5 – 10%< 5%6746526717373555685Birmingham76Rotterdam62 435554Helsinki96Stockholm102Dublin59Prime Warehousing Rent € / sq m pa, Q4 2012Rents decreasingRents stableRental ChangesRents increasing% Rental Changes (Y-o-Y)48Bucharest
  • 20Rental GrowthSlowingRentsFallingRental GrowthAcceleratingRentsBottoming OutEMEA Industrial Property Clock, Q4 2012Source: Jones Lang LaSalle, January 2013Prime Rent Western EuropePrime Rent Eastern EuropePrime Rent Middle East and AfricaJeddah, RiyadhAbu Dhabi, Barcelona, Belgrade, Bratislava, Bucharest, Dubai, Dublin, Glasgow, HelsinkiKiev, Lille, Lyon, Madrid, Marseille, Milan, Paris, Rome, Stockholm, StuttgartIstanbulLondon, WarsawAthens, Birmingham, Budapest,Edinburgh, Leeds, Manchester, ZagrebAmsterdamAntwerp, Berlin, Brussels, Copenhagen,Moscow, Oslo, RotterdamLisbonDusseldorf, Frankfurt,Hanover, Munich, PragueJohannesburgCologne, Hamburg
  • 21020406080100120140160180200LondonMoscowAmsterdamMunichMadridBrusselsPragueBudapestParisMilanWarsawNet Effective Rent Prime RentSource: Jones Lang LaSalle, February 2013EUR/m²pa10%% share = incentives as % of prime rent8%15%45%9%8%2%7%6%5%8%Favourable Incentives can still be Negotiated in CertainLocations, particularly for Second-Hand StockIncentives most generous in Paris, Madrid and London
  • -10-8-6-4-202468102000200120022003200420052006200720082009201020112012201320142015201622Uneven Rental Growth is Expected over the ComingYearsEuropean Logistics Rental Growth (% pa) Logistics Rental Growth (% pa 2012-2016)FSource: Jones Lang LaSalle, December 20120.2-1.1-0.7-0.5-0.40.00.20.20.30.40.50.70.70.70.80.91.01.11.11.31.41.92.43.1-2.5-4 -3 -2 -1 0 1 2 3 4EuropeMadridAmsterdaParisLyonWarsawBudapestRotterdamBirminghaMunichManchestBerlinBarcelonaMoscowMilanPragueDüsseldorHamburgLondonAntwerpFrankfurtStockholmOsloBrusselsDublin
  • 2323European Market Conditions Matrix - CoreMARKET TIMELINE COMMENTSAmsterdam 2013 2014 2015 Rents are likely to rise this year driven by reducing choice.Antwerp 2013 2014 2015Rents are now close to pre-crisis levels and are expected to stabilise at this level during the next twoyears.Barcelona 2013 2014 2015Industrial space was cheaper at the end of 2012 compared with 2011. We expect prime headline rents toremain unchanged in 2013 before they rise next year.Berlin 2013 2014 2015Rents are expected to stabilise at the current level this year before they rise in 2014 driven by limitedsupply.Birmingham 2013 2014 2015As occupier demand remains in balance with available supply, rents are expected to be broadly stableover the next three years.Brussels 2013 2014 2015 We expect rents to remain broadly stable in 2013 and 2014 sustained by limited available supply.Budapest 2013 2014 2015Rents, which are now lower compared with the previous year, are expected to stabilise at this level overthe next two years.Dublin 2013 2014 2015Rents, 50% below their peak levels in 2008, are expected to be stable throughout 2013. However,reducing choice will contribute to rental increases in 2014 and 2015.Dusseldorf 2013 2014 2015 Following no rental changes in 2012, we expect rents to edge up over the next two years.Frankfurt 2013 2014 2015 Rents were unchanged throughout 2012, however they are set to rise this year driven by limited choice.Hamburg 2013 2014 2015 Driven by continued high competitionfor space, rents are anticipatedto edge up in 2013 and 2014.Helsinki 2013 2014 2015With demand and supply balance expected to remain broadly unchanged, we expect stable rental levelsover the next two years.Tenant Favorable MarketNeutral MarketLandlord Favorable MarketSource: Jones Lang LaSalle, February 2013
  • 2424European Market Conditions Matrix - CoreMARKET TIMELINE COMMENTSLondon 2013 2014 2015 Rents are expected to rise in London this year driven by reducing occupier choice.Lyon 2013 2014 2015 No significant rental changes are expected over the next three years.Madrid 2013 2014 2015 We expect costs to remain competitive over the next two years due to high supply levels.Milan 2013 2014 2015Rents, now significantly lower compared with last year, are expected to stabilise at the current level in2013 before they rise in 2014.Moscow 2013 2014 2015 Rents are set to fall in Moscow this year as the supply pipeline is improving.Munich 2013 2014 2015We expect rents to decline this year driven by slowing competition.However, declining choice levelsnext year will push rental levels upward.Paris 2013 2014 2015With demand and supply balance expected to remain broadly unchanged, we expect stable rental levelsover the next three years.Prague 2013 2014 2015 Rents will remain broadly unchanged over the next two years sustained by relatively strong competition.Rome 2013 2014 2015We expect rents to stabilise at the current level this year before limited supply contributes to rentalincreases in 2014.Rotterdam 2013 2014 2015 Stable rents are expected over the next three years sustained by decreasing modern supply.Stockholm 2013 2014 2015 No major rental changes are expected in 2013. However, rents are set to rise from 2014 onward.Warsaw 2013 2014 2015We expect costs in Warsaw to remain very competitive over the next few quarters due to relatively highchoice levels.Tenant Favorable MarketNeutral MarketLandlord Favorable MarketSource: Jones Lang LaSalle, February 2013
  • 25Occupier Market Constrained by Shortage of AvailableSupply• Declining occupier choice as new development continues to be demand-drivenrather than speculative• Occupiers continue to face strong competition for modern space as demandremains high compared with existing supply• Significantly higher choice for secondary product• Two options for occupiers:− Secure built-to-suit agreements with less flexible lease conditions− Occupiers less dependent on large modern requirements will be able to negotiateshorter leases, lower rents and higher incentives for existing buildings• Rental growth outlook varies significantly across European markets• Rents are set to fall in markets where vacancy levels remain relatively high whilerental increases in select locations will be driven by dwindling modern supply
  • This publication is the sole property of Jones Lang LaSalle IP, Inc. and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of JonesLang LaSalle IP, Inc. The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of theaccuracy of this information. We would like to be informed of any inaccuracies so that we may correct them. Jones Lang LaSalle does not accept any liability in negligence or otherwise for any loss or damagesuffered by any party resulting from reliance on this publication.Contact:Alexandra TornowAssociate Director, Logistics and Industrial Research, EMEATel. +49 40 35 00 11 339Email: alexandra.tornow@eu.jll.comNejc JusResearch Analyst, Logistics and Industrial Research, EMEATel. +44 20 31 47 12 54Email: nejc.jus@eu.jll.comCOPYRIGHT © JONES LANG LASALLE IP, INC. 2013Lee ElliottHead of Research, EMEATel. +49 20 31 47 12 06Email: lee.elliott@eu.jll.com