The logistics sector has been the top performer in the European commercial property market and is set to bounce back strongest once the COVID-19 crisis abates.
So says two reports just published by leading industry players.
The logistics sector has shown most resilience and has maintained positive rental growth and yield compression during Quarter 1, 2020, according to a report from international agency, Cushman & Wakefield.
Rents rose 0.1% over the quarter pushing annual growth to 2.5%. This is down on 3.2% last quarter. Four markets registered growth in Q1 2020 compared to 16 in Q4 19, with two of these markets in the Netherlands – The Hague (+9%) and Rotterdam (+1.5%).
Moscow headed logistics yield movement in Europe during the first three months of the year, which was up 11% quarter-on-quarter. The average prime yield was 5.45%.
Positive sentiment for logistics sector
Nigel Almond, Head of Data Analytics in Cushman & Wakefield’s EMEA Research & Insight team, says, “Looking forward, sentiment is generally more positive in the logistics sector as supply chains remains critical for the distribution of essential goods.”
A major report from media company PropertyEU points out that the disruption of the supply chain, development project delays and rental hold-ups is likely to be temporary.
But in the short-term, the Coronavirus crisis has resulted in increased use of online shopping, which has seen demand for warehousing rise. Industry experts say industrial sector of the commercial property market is fundamentally strong and the continued rise in demand for e-commerce will help it combat the inevitable recession.
The leading player taking part in the PropertyEU survey is Panattoni Europe, with more than 6 million square meters of delivered logistics floor space from 2017-2019. Next comes Goodman at 2.95 million and Segro in third with 2.2 million.
Restrictions in travel and movement are also making local viewing difficult, with many firms focusing on current projects. But once the restrictions are lifted, a rapid bounce-back is predicted.
Panattoni Chief Executive Officer, Robert Dobrzycki, says, “I am convinced that the present switch in consumers’ preferences in favour of online shopping will translate into future behaviour, and, consequently, higher demand for warehouse space.” That is why the sector faces a strong future.
Chris Caton, Senior Vice President, head of Global Strategy & Analytics at US-headquartered Prologis expects that lower demand due to recession may last six months, after which business is likely to pick up, as companies look to increase their stock inventories.
Logistics pan-European investment firm Blackbrook says warehousing in Europe is likely to expand, as there has a shortage of logistics facilities.
For the latest industrial and logistics property listings, see Consorto.com.